What are Faster Payments?

In the fast-moving world of business, your company needs to be able to make quick payments in the most efficient way possible. You may have come across the terms BACS, CHAPS or Faster Payment in your personal banking, or while running a business. So what is are Faster Payments, and how do they work? This article will dive into the following areas to answer those very questions:

• What is a Faster Payment?
• When would you use a Faster Payment?
• What information do you need to make a Faster Payment?
• How to make a Faster Payment?
• How long does a Faster Payment take?

If you’ve ever sent money through online banking or a mobile app, then you’ll have likely used the Faster Payments system. The Faster Payments process was introduced in 2008, and is a type of electronic payment that was designed — as the name suggests — to be a quicker way of sending money between bank accounts. It is faster than other payment methods and is free to send with no additional charges attached.

There are 21 banks and building societies that participate in the Faster Payments system. Each bank has its own limit on how much money can be sent in one payment, or per day, through Faster Payment on their web or mobile systems. Some banks allow transfers for up to £250,000, but there are other methods available for money transfers that exceed the banks limit, such as BACS (up to £250,000) or CHAPS (anything over £10,000). 

Everyday payments are made using the Faster Payments system. If you have ever transferred money to a friend on your personal banking app, then it will have been sent via a Faster Payment. When it comes to business use, you may pay your suppliers or invoices via a Faster Payment too.

Faster Payments are convenient for many types of payments, as the system operates 27/4. You’ll find that you can use them for many transactions, whether low or high value, including:

• Recurring transfers, as the details of the payee will be saved after your first payment.
• One-off, or time-sensitive transactions, as the payment is quick to make and available to the recipient immediately.
• Forward dated payments. You are able to make payments but set the date for the future, this would ensure that you always pay an invoice before the due date for example. 
• Standing orders, which are payments that are sent automatically on the same pre-arranged date every month. These are sent through the Faster Payment system once set up.

To make or set up a Faster Payment, you will need the following details for the account of the person or business you will be paying:

• Sort code
• Account number
• Full name (or names) on the account

If you want someone to send money to you via a Faster Payment you should provide these same details. If you do not provide, or get all this information, then you may encounter difficulty in making the payment without all the relevant details. Missed information could lead to a delay or errors for the person receiving the funds.

You simply need to log into your online banking or mobile app to make a Faster Payment. You can also do them over the phone or in a branch with your bank if you do not have access to a digital banking system.

You then input the details of the person you are paying into the ‘set up a new payee’ section, fill in the amount, and send. It’s a very simple process, with no forms or extra security attached once you have logged into the banking platform.

It is possible to make Faster Payments up to the value of £250,000, but every bank has its own limit on the maximum you can send via online banking, over the phone or in a branch. 

If you have to send more than your bank limit, you should make a CHAPS payment which can arrive the same day but know that there will be a charge (usually up to £25). 

BACS is also another option, but the BACS payments take three working days to clear in the receiving account. Faster Payments may be a more convenient way of making both one-off or regular payments, as it’s faster than BACS and it will not have a charge attached, unlike a CHAPS payment. However, you aren’t able to cancel a Faster Payment as it’s an immediate process. 

A Faster Payment will usually appear in the recipient account immediately. Sometimes the payment can take up to two hours, but it will almost always be credited to the receiving account on the same working day. 

Now you understand the uses of Faster Payments, you could make managing your business money simple too. Financial management can be stressful and time-consuming when you’re self-employed — that’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, Faster Payments, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.