Faster Payments

In November 1998 the UK Treasury commissioned the Cruickshank Report, a review of competition within the UK banking sector, which was reported in March 2000. Among its recommendations was primary legislation to establish an independent payment systems commission (PayCom) in place of existing, privately controlled interbank arrangements. The following day, Chancellor Gordon Brown announced that legislation would be introduced, if necessary, to open payment systems to increased competition.Banking Liaison Group, [http://www.bankexperts.co.uk/cruickshank/payment-systems.htm Cruickshank banking review] {{Webarchive|url=https://web.archive.org/web/20081019004040/http://www.bankexperts.co.uk/cruickshank/payment-systems.htm |date=19 October 2008 }} Initially the banking industry was consulted by the government on further steps and progress in payment services monitored by the Competition Commission and the Office of Fair Trading (OFT).

By May 2003, while the OFT was able to report modest improvements, such as changes to BACS and the governance of APACS, some competition concerns remainedOFT, [http://www.oft.gov.uk/news/press/2003/pn_66-03 Press release PN 66/03 - market study on payment systems] {{Webarchive|url=https://web.archive.org/web/20081019110147/http://www.oft.gov.uk/news/press/2003/pn_66-03 |date=19 October 2008 }} 22 May 2003 and, in December 2003, the Treasury announced the OFT would take on an enhanced role in relation to payment systems, for a period of four years to resolve outstanding competition problems in advance of any legislationHM Treasury, [http://www.hm-treasury.gov.uk/media/D/1/PBR03completerep%5B1%5D.pdf Pre-Budget Report - para. 3.16] December, 2003 – essentially self-regulation. In March 2004 the OFT announced the formation of a joint government-industry body, the Payments Systems Task Force, under its chairmanship.OFT, [http://www.oft.gov.uk/news/press/2004/43-04 Press release PN 43/04 - payments systems task force announced] {{Webarchive|url=https://web.archive.org/web/20081019110152/http://www.oft.gov.uk/news/press/2004/43-04 |date=19 October 2008 }} 15 March 2004

In May 2005 the task force announced that an agreement had been reached to reduce clearing times for phone, Internet and standing order payments.OFT, [http://www.oft.gov.uk/news/press/2005/94-05 Press release PN 94/05 - faster payments service announced] {{Webarchive|url=https://web.archive.org/web/20080503125208/http://www.oft.gov.uk/news/press/2005/94-05 |date=3 May 2008 }} 24 May 2005 This committed the payments services industry to develop a system able to clear automated payments in no more than half a day – the so-called ELLE model – resulting in payment being received the same day if made sufficiently early. Implementation groups were given six months to bring forward detailed proposals.

In October 2005 the contract to provide the central infrastructure for this new service was awarded by APACS to Immediate Payments Limited, a joint venture company set up by Voca and LINK who have since merged to form Vocalink.

In December 2005 the Payment Systems Task Force accepted an APACS recommendation for a still more ambitious target on payment timesAPACS, [http://www.apacs.org.uk/media_centre/press/05_12_16.html Press release - details of faster payment services] {{Webarchive|url=https://web.archive.org/web/20080919212850/http://www.apacs.org.uk/media_centre/press/05_12_16.html |date=19 September 2008 }} 16 December 2005 to ensure access to funds within a couple of hours of any payment being made, and allowing payments to be sent 24 hours a day, 7 days a week, to be available by November 2007. This stage also marked formal dissolution of the Task Force and reformation as a permanent body, the Payments Industry AssociationOFT, [http://oft.gov.uk/news/press/2006/159-06 Press release PN 159/06 - new governance body for payment systems] {{Webarchive|url=https://web.archive.org/web/20081012002902/http://www.oft.gov.uk/news/press/2006/159-06 |date=12 October 2008 }} 14 November 2006 (later Payments Council), responsible for governance of all payments systems, including Faster Payments.

APACS was responsible for the development and delivery of Faster Payments, but after May 2008 transferred day-to-day operations and management of the service to the CHAPS Clearing Company (a member-based organisation responsible for the CHAPS sterling high-value same-day payment system.) Towards the end of 2011, Faster Payments Scheme Limited (a member-based organisation) was set up to separate out the day-to-day operations and management of the service from CHAPS.

VocaLink continues to provide and operate the infrastructure for the service.

The original founding members of the new service were Abbey (now Santander UK), Alliance & Leicester (now part of Santander UK), Bank of Scotland (including Halifax), Barclays, Citi, Clydesdale Bank (including Yorkshire Bank, both now Virgin Money), The Co-operative Bank, HSBC, Lloyds TSB (now Lloyds Bank and TSB), Nationwide Building Society, Northern Bank (now Danske Bank), Northern Rock (now part of Virgin Money) and The Royal Bank of Scotland (including NatWest and Ulster Bank).{{citation needed|date=September 2014}}

Abbey and Alliance & Leicester merged their membership under Santander UK in February 2011; Bank of Scotland merged their membership into Lloyds Banking Group in September 2011 and Northern Rock resigned from membership in October 2011. The remaining ten members became the initial shareholders of Faster Payments Scheme Limited in November 2011.{{citation needed|date=September 2014}}

In December 2016, Metro Bank joined the system, the first High Street bank to do so since its inception.Press Release, [http://www.fasterpayments.org.uk/press-release/metro-bank-becomes-first-high-street-bank-join-faster-payments-scheme-its-launch Metro Bank becomes first high street bank to join Faster Payments Scheme since its launch] 6 December 2016

Later, in January 2017, Starling Bank joined the service as a direct partner, the first digital-only bank in the system's history.PaymentsEye article, [http://www.paymenteye.com/2017/01/23/starling-bank-becomes-first-digital-only-bank-to-join-faster-payments-as-direct-partner Starling Bank becomes first digital-only bank to join Faster Payments as direct partner] {{Webarchive|url=https://web.archive.org/web/20180331173856/http://www.paymenteye.com/2017/01/23/starling-bank-becomes-first-digital-only-bank-to-join-faster-payments-as-direct-partner/ |date=31 March 2018 }} 23 January 2017

In February 2018, Ebury became the first to join as a directly connected non settling participant, DCNSp.{{Cite web|url=http://www.fasterpayments.org.uk/press-release/new-way-accessing-faster-payments-spreads-true-real-time-247-payments-wider-ever|title=New way of accessing Faster Payments spreads true real-time 24/7 payments wider than ever {{!}} Faster Payments|website=www.fasterpayments.org.uk|access-date=2019-01-25}}

In April 2018, TransferWise joined Faster Payments as the first non-bank payment service provider to be a directly connected settling participant,Reuters, [https://web.archive.org/web/20180418114225/https://uk.reuters.com/article/uk-transferwise-britain/start-up-transferwise-breaks-into-britains-faster-payments-scheme-idUKKBN1HP110 Start-up TransferWise breaks into Britain's faster payments scheme] 18 April 2018 after being the first of its kind to gain access to Bank of England's Real-Time Gross Settlement (RTGS) system.Financial Times, [https://www.ft.com/content/78886740-42e9-11e8-803a-295c97e6fd0b TransferWise becomes first non-bank to join BoE payment system] 18 April 2018

In February 2019, [https://equalsmoney.com/ Equals Money] joined Faster Payments as the fourth non-bank to be directly connected. There are now 40 bank and non-bank members.{{Cite web |title=Payment system participant list |url=https://www.wearepay.uk/participants-list/ |access-date=2022-06-07 |website=Pay.UK |language=en-US}}

Following the initial launch of the central infrastructure, work was planned to provide a direct corporate access channel, and the first such payment was made in July 2009.PR Newswire, [http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/07-23-2009/0005065126&EDATE= First Payment via UK Faster Payments Service Direct Corporate Access] {{Webarchive|url=https://web.archive.org/web/20091001154001/http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104 |date=1 October 2009 }} 23 July 2009 This will ultimately enable businesses to submit large numbers of payments directly into the Faster Payments Service.

From 6 September 2010, the value limit for all payment types was raised to £100,000.UK Payments Administration, [http://www.chapsco.co.uk/chaps_company/press_releases/-/page/1022/ Faster Payments Scheme Boosts Banks’ Ability to Provide a Competitive Service to Customers] {{Webarchive|url=https://web.archive.org/web/20100913151920/http://www.chapsco.co.uk/chaps_company/press_releases/-/page/1022/ |date=13 September 2010 }} 10 September 2010 The limit is now £1 million. However, "organisations offering the service can set their own limits, depending on how the payment is sent, and the type of account their customer is sending from."{{cite web|title=Transaction limits|url=https://www.wearepay.uk/what-we-do/payment-systems/faster-payment-system/transaction-limits/ |publisher=pay.uk |accessdate=10 August 2023}}

On 1 January 2012, Regulation 70 in the Payment Services Regulations 2009 went into effect, requiring that all standing orders be settled within a day of submission.{{cite web|title=The Payment Services Regulations 2009|url=http://www.legislation.gov.uk/uksi/2009/209/contents/made|publisher=The National Archives|accessdate=6 May 2014}} This shifted about five million payments from the BACS system to FPS, putting monthly volumes above 20 million. FPS handled 967.6 million transactions in 2013, up 19% from the prior year. The total value of transactions in 2013 was £771.4 billion, up 25% over 2012.{{cite web|title=Annual Summary of Payment Clearing Statistics 2013 |url=http://www.paymentscouncil.org.uk/files/payments_council/publications_2013/annual_clearing_statistics_2013.pdf |publisher=The Payments Council |accessdate=6 May 2014 |url-status=dead |archiveurl=https://web.archive.org/web/20140507011838/http://www.paymentscouncil.org.uk/files/payments_council/publications_2013/annual_clearing_statistics_2013.pdf |archivedate=7 May 2014 }}

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Category:2008 establishments in the United Kingdom

Category:Banking in the United Kingdom

Category:Banking technology

Category:Financial services companies established in 2008

Category:Payment clearing systems