UK Faster Payments: Universal wave of the future or a distinctive UK payments model?

Abstract

The ‘Faster Payments’ scheme run by the CHAPS Clearing Company is rapidly maturing into a fundamental part of the UK payment system. It has already gone much further than envisaged by regulators concerned about float on payments taking several days to clear. It provides a fully real-time payment backbone which has much wider application both within and beyond the UK. In examining the potential for such a payment backbone, one must look beyond the ‘Faster’ part of Faster Payments and consider the features enabled by real-time processing (including operation 24 × 7, real-time settlement risk management, self-service, third-party connectivity), which provide the platform for transforming payments processing. Roll-out of the UK Faster Payments service has focused on getting the widest possible reach for the basic service, but there are already plans to exploit the service to create new propositions, including remote account to account mobile payments and online payments. Outside the UK, VocaLink’s research has indicated that real-time payments are considered inevitable, with implementation supported by a number of initial business propositions, the most favoured being mobile remote payments, echoing the initiative in the UK. Evidence of real-time adoption or aspiration is becoming evident globally, with common themes becoming identifiable. A hypothesis can be advanced from this that real-time or Immediate Payments represent a significant stage in the development of payment systems, and will facilitate the long-term convergence of payment infrastructures.