APACS Says UK Faster Payments Service Now Live

In keeping with the phased approach banks* have begun today to offer customers the facility to send or receive payments processed through the new system. By the end of the year the majority of the UK’s internet, phone and standing order payments are expected to be made using the new system.

From today, Barclays, Citi, Clydesdale and Yorkshire Banks (National Australia Group), HSBC, Lloyds TSB, Northern Bank (Danske Bank) and Royal Bank of Scotland Group are sending and receiving phone and internet payments, and Alliance & Leicester, HBOS, Nationwide Building Society and Northern Rock are receiving these payments. As part of the phased rollout, some financial institutions are placing lower initial limits on the value of payments that can be sent or alternatively they may be choosing to phase rollout across their customer accounts.

To mark the introduction of the service all thirteen founding members joined together to make a charity donation of £10,000 to Oxfam for the Disasters Emergency Committee’s (DEC) Burma Cyclone Appeal: one of the very first payments in the early hours of this morning was to the appeal; this arrived at the charity within a couple of hours rather than taking three working days as it would have done in the past.

Graham Mackay, Oxfam's Deputy Humanitarian Director said: "Oxfam is grateful to have received £10,000 toward the DEC Burma Cyclone Appeal from the payments industry. This money will help Oxfam and other members of the DEC to deliver vital aid to the many thousands of people affected by Cyclone Nargis."

The Faster Payments Service enables banks to process one-off payments made over the internet or by phone within hours, not days, benefiting customers by speeding up the clearing of their payments. Customers are able to make internet and phone payments outside of banking hours even at the weekend. The service will also speed up standing order payments, enabling them to be cleared on the day they are sent on bank working days. Standing orders will start to be processed through the Faster Payments Service from 6th June.

Customers do not need to make any change to any payments. Any payment that is not processed through the new service will continue to be made using the existing Bacs three-day service. They will be informed directly by their banks when they are able to use the service.

Notes: The thirteen founding members are: Abbey, Alliance & Leicester, Barclays, Citi, Clydesdale and Yorkshire Banks (National Australia Group), Co-operative Bank, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Northern Bank (Danske Bank), Northern Rock, Royal Bank of Scotland Group (including NatWest and Ulster Bank). VocaLink, a separate service company, is providing the infrastructure for the Faster Payments Service.

Currently internet and phone payments account for just 2% of interbank automated payment volumes, but these are growing rapidly as customers increasingly turn to them instead of more traditional payment methods such as cheques. Standing orders account for 6% of interbank automated payments. The new system is being built to cater for the large volume increases projected for the future. The remaining 92% of interbank automated payments are 'bulk' transactions generated by organisations and businesses both large and small and are: Direct Debits, used to pay utility bills, life and general insurance premiums and various subscriptions; Bacs Direct Credits, used for salary payments, pensions, and state benefits; and CHAPS payments.

There is a maximum limit placed on the value of each payment sent through the Faster Payments Service, with the maximum value for internet and phone payments set at £10,000 and standing orders to £100,000. During this launch period some banks are adopting lower limits than those figures.