Phased rollout for new Faster Payments Service

APACS, the UK payments association, has confirmed plans for the launch of the new Faster Payments Service. This will be the first new payment service introduced in the UK for more than 20 years. The 13 founding banks - including Abbey, Barclays, Lloyds TSB and Nationwide Building Society - will be gradually implementing their own plans to deliver the new service to their customers. This phased approach will help ensure that the service is launched smoothly, securely and with total reliability for customers. VocaLink, a separate service company, is to provide the infrastructure for the Faster Payments Service.

The Faster Payments scheme, which includes standing orders, is the banking industry's response to government concerns that the UK did not have a low cost, quick and efficient electronic payment mechanism. This is a big step and will be welcomed by consumers, although it could present a combination of opportunities, challenges and risks for the banks.

The new service will benefit customers by speeding up one-off payments made over the internet or by phone, reducing the current three-day clearing timescale to enable these payments to clear within hours. For the first time, it will also be possible to make these payments 24 hours a day. The service will also enable same day clearing for regular standing order payments made on bank working days, reducing the current clearing timescale of three days.
Each participating financial institution will be confirming their own plans for introducing their competitive services to their customers and explaining what this means for them. At present there is no need for customers to do anything or to make any changes to existing payments. Any payment that is not processed through the new service will continue to be made using the existing BACS three-day service.  

To ensure a smooth rollout of this new service, volumes on launch day are being carefully managed. This means on day one it is expected that only five per cent of members' internet and phone payments will be processed as faster payments. Over the summer the overall volumes are expected to increase to over 50 per cent of anticipated peak-day processing volumes.

Paul Smee, APACS Chief Executive, said: "The UK banking industry has pulled together to deliver this new payment infrastructure to a demanding timescale. The challenge of achieving this cannot be underestimated. As with any payment system there is no room for error as it will be an integral part of the UK's economic infrastructure. A phased rollout will best help us ensure customers get the safety, integrity and efficiency they have come to expect when making payments here in the UK."