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UK Faster Payments: The Basics

August 3, 2020

The UK Faster Payment System enables you to make instant bank payments. A regular bank payment in the UK is technically a Faster Payment. However, when having to make multiple Faster Payments as a business things become more complicated. This will explain everything you need to know about the Faster Payments Service (FPS) and how to best take advantage of it.

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UK Faster Payment System: The Basics

The Faster Payment System is one of three bank payment schemes enabling you to make a payment to another bank account. Unless you work for a medium sized company or larger you’d never even realise there are different bank payment types in the UK. Here’s a quick overview comparing all UK bank payment types from a business point of view:

  1. Chaps Payment: For values above £250,000 | £20+ per payment 
  2. Bacs Payment: For 500+ employees | £0.05+ per payment
  3. Faster Payments Service: For 50+ employees | £0.50+ per payment

Depending on the number of payments you are making a month you can select any of the above payment options. However, Faster Payments can become expensive when using it through your Corporate banking system (i.e. Natwest Bankline).

What Is Faster Payments?

Faster Payments are bank payments that clear in seconds rather than days. This is the standard way for consumers to make bank payments, however, for businesses, Bacs payments are still the primary option as they have been the standard for decades. This is one reason Telleroo started to support Bacs files to make Faster Payments.

Some banks refer to Faster Payments as same day payments. If you are a regular business banking customer of any high-street bank then any standard payment from your online banking is a Faster Payment. Be careful not to use their same day payment option as this will incur £20+ fees per payment; this is only suitable for values above £250,000 per payment.

How long do Faster Payments take

Faster Payments only take seconds to send. The payment will arrive within a minute and is immediately visible in the payee’s bank account. The system runs 24/7 including bank holidays and weekends. This can be especially helpful when you run a weekly payroll schedule.

Some banks still impose cut off times for same day Faster Payments to their corporate customers. Regular business banking clients aren’t subject to any cut off times.

Faster Payments Cut Off Times

The Faster Payments system itself runs round the clock, however, your bank might have cut off times as early as 5:30pm. Telleroo does not have any cut off times which allows you to make payments at any time of day, including weekends.

Faster Payments Limits

A Faster Payment can be up to £250,000 per payment. This limit can be lower if you are a regular business banking customer at your high street bank. If you need to make a domestic payment above the value of £250,000 you are left with one choice, to make a CHAPS payment. Keep in mind that CHAPS is £20+ per line. Alternatively, you could split higher amounts into multiple individual payments in order to avoid higher transactions charges, i.e. paying a large invoice.

Faster Payment Charges

Faster Payments is one of the most expensive options to make bank payments, normally at £2.50 per line if you are a Corporate banking customer at Natwest Bankline or similar. However, because of new banking systems such as Telleroo you can get the per line cost down to £0.45 or less.

What is a Bacs Faster Payment?

A Bacs Faster Payment doesn’t technically exist, however finance people use Bacs and bank payment interchangeably. If you ever hear someone using the term “Bacs Faster Payment” theta are likely referring to a regular Faster Payment.

How to best take advantage of Faster Payments?

As a Finance Manager, Financial Controller, or Head of Finance you need to be thinking about what payment type suits your business best. It can make a big difference in bank charges and operational workload. The below can help you guide through this:

  1. Am I running a weekly payroll?
  2. Have I got any payments that are time sensitive?
  3. Do my suppliers benefit from receiving funds faster?
  4. Do you rely on receiving timesheets for payroll?
  5. Have you got strict payment deadlines?
  6. Would you benefit from weekly payment runs?
  7. What is your payment run frequency?

Access to Faster Payments puts you in complete control of your payment runs, eliminating any annoying cut off times and giving you enough flexibility to design your own payment process.

Learn more about our Faster Payment Software to make Bulk Faster Payments in an instant.

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