A banking initiative in the UK, aimed at improving the speed of low value person-to-person or business-to-business payments to near real-time, Faster Payments Service (FPS) is a new service to be intoduced mid 2008. It will speeden up the payments process such, as if the two accounts were in the same bank as opposed to approximate three working days usually taken for payments. With  faster payment for high value transactions service already in place, Faster Payments has its focus on low value transactions.

The development of this new service being massive and complex is predicted to involve a significant investment. Revolutioning the UK’s automated payments infrastructure it is said to be comparable to the best in the world. It is designed to replace transfers incurring interest on the three-day transfer period and to improve customer satisfaction. Its more than just a new way of payments. The technology and scope of this service will continue to evolve and bring about changes to UK payments and clearing. Making banking in UK a more competitive and attractive proposition. Though Faster Payments technology is limited to credits to start with, there could be plans for its future  expansion into debits.

APACS, UK trade association for payments and for those institutions that deliver payment services to customers, mentioned in a Feb 27, 2008 press release on “Banking industry update on new Faster Payments Service” that “the banking industry is on track to deliver the infrastructure that will enable a new faster payments service to be launched starting on 27th May this year.” further adding, “The new service will benefit customers by speeding up one-off payments made over the internet or by phone, enabling them to be made all day every day: they currently take three days. It will also enable regular standing order payments to move more quickly on bank working days: reducing the timescale from three days to provide a same day service. The new system will run alongside existing UK electronic payment schemes such as Bacs and CHAPS.  As the launch of the new system approaches, further updates and information will be provided and clear information made available to customers about the impact this will have on them.”

There is significant reduction in risk involved in missed payments as with Faster Payments the payments are notified almost instantly enabling quick rectification of return payments. There will be opportunities for banks to introduce their new products and services with advent of Faster Payments. Making it much easier for banks to provide their customers with a consistent experience all through ensuring better risk management simultaneously.