The Faster Payments Service (FPS) is the UK’s real-time payment infrastructure that enables near-instant bank transfers between participating UK bank accounts. Launched in 2008, it replaced the previous scenario where most electronic payments took three working days to clear through Bacs.
How Faster Payments works
When a payer initiates a Faster Payments transfer, the instruction is sent from their bank to the central Faster Payments infrastructure (operated by Pay.UK), which routes it to the recipient’s bank. The entire process typically completes within seconds, though it can take up to two hours in some circumstances.
Processing steps
- Payer initiates a payment through online banking, mobile banking or phone banking
- Payer’s bank validates the instruction and checks available funds
- Payment instruction is sent to the Faster Payments central infrastructure
- The system routes the payment to the recipient’s bank
- Recipient’s bank credits the funds to the recipient’s account
- Both banks update their records and settlement occurs
Settlement
While individual payments appear near-instant to the customer, the underlying interbank settlement happens in cycles throughout the day. Banks exchange net positions, and final settlement occurs across accounts held at the Bank of England.
Availability
Faster Payments operates 24 hours a day, 7 days a week, 365 days a year, including weekends and bank holidays. This is a significant advantage over Bacs and CHAPS, which only process on working days.
Nearly all UK current accounts support Faster Payments, covering over 99% of UK bank accounts. A small number of accounts at specialist institutions may not participate.
Transaction limits
| Party | Typical limit |
|---|---|
| Personal accounts (most banks) | £250,000 per transaction |
| Business accounts | Varies by bank, often £250,000 - £1,000,000 |
| Some banks | Up to £1,000,000 for business accounts |
| System maximum | £1,000,000 per transaction |
Individual bank limits may be lower than the system maximum. For payments above these limits, businesses typically use CHAPS, which has no upper limit.
Increasing your limit
Some banks allow customers to temporarily increase their Faster Payments limit for specific transactions. This usually requires:
- Additional identity verification
- Phone call to the bank
- Enhanced security checks
Faster Payments vs other UK payment methods
| Feature | Faster Payments | Bacs | CHAPS |
|---|---|---|---|
| Speed | Seconds to 2 hours | 3 working days | Same day (by cut-off) |
| Availability | 24/7/365 | Working days only | Working days only |
| Maximum amount | £1,000,000 | No limit | No limit |
| Cost to sender | Usually free (personal) | Low (pennies per item) | £20 - £35 per payment |
| Settlement | Near real-time | End of day 3 | Same day, real-time gross |
| Best for | Urgent transfers, everyday payments | Bulk payments, payroll, direct debits | High-value, time-critical payments |
For detailed information on each alternative, see our guides to BACS payments and CHAPS.
Business applications
Paying invoices
Faster Payments is the most common method for paying invoices in the UK, particularly for:
- Supplier payments within the payment terms deadline
- Urgent payments where the due date is imminent
- One-off payments that do not justify setting up a direct debit or standing order
Receiving customer payments
Businesses can provide their sort code and account number on invoices for customers to pay via Faster Payments. Including a clear payment reference on the invoice helps with reconciliation.
Payroll
While bulk payroll is typically processed through Bacs, Faster Payments can be used for:
- Late payroll corrections
- Ad hoc bonus payments
- Emergency salary advances
- Payments to new starters not yet on the payroll system
Refunds
When issuing refunds related to credit notes, Faster Payments provides near-instant delivery, improving the customer experience.
Standing orders
Most UK banks now process standing orders through Faster Payments rather than Bacs, meaning standing order payments typically arrive on the same day.
Costs
Personal accounts
Most UK banks offer Faster Payments free of charge for personal current accounts. This applies to both sending and receiving.
Business accounts
Business banking charges vary by provider:
| Bank type | Typical charge |
|---|---|
| Major high street banks | Free or included in account package |
| Challenger banks | Usually free |
| Some traditional accounts | £0.20 - £0.50 per transaction |
Business customers should check their banking terms, as charges may be bundled into monthly fees or charged per transaction.
Security and fraud considerations
The speed of Faster Payments means that once a payment is made, it is very difficult to reverse. This makes it important to:
- Verify payee details before making a payment, especially for first-time or changed recipients
- Use Confirmation of Payee (CoP) where available, which checks whether the name matches the account
- Be vigilant against APP fraud (authorised push payment fraud) where scammers trick individuals or businesses into making payments to fraudulent accounts
- Follow internal approval processes particularly for new supplier payments or changes to bank details
Confirmation of Payee
Confirmation of Payee (CoP) is a name-checking service that verifies whether the name entered by the payer matches the name on the recipient’s account. Major UK banks are required to offer CoP, which helps prevent:
- Payments to the wrong account due to data entry errors
- APP fraud where scammers impersonate legitimate payees
Accounting treatment
Faster Payments transactions are recorded in the same way as any bank transfer:
Payment made
Debit: Trade payables / Expense account
Credit: Bank
Payment received
Debit: Bank
Credit: Trade receivables / Revenue
Because Faster Payments settle almost instantly, there is rarely a timing difference between the payment instruction and the bank statement entry, which simplifies bank reconciliation compared to Bacs.
The future of UK payments
Faster Payments is part of the broader UK payment infrastructure managed by Pay.UK. The system is being developed through the New Payments Architecture (NPA) programme, which aims to modernise the underlying technology while maintaining the speed and availability that businesses and consumers rely on.
Key developments include:
- Request to Pay allowing payees to send payment requests that payers can respond to through their bank
- Enhanced data supporting richer payment information for better reconciliation
- Increased resilience through modernised infrastructure
- Greater interoperability with international payment systems