Bank transfers in the United Kingdom used to take days to clear. Now, money can be sent from one account to another in seconds, with Faster Payments. Businesses can pay suppliers, issue refunds, and move funds between accounts instantly.

Below, we’ll explain how Faster Payments works, how it compares to other UK payment systems, and how businesses can use it effectively.

What’s in this article?

• What is the Faster Payments Service?
  
• How does Faster Payments compare to CHAPS and Bacs?
  
• Best practices for businesses that use Faster Payments
  

What is the Faster Payments Service?

The UK’s Faster Payment System was launched in 2008 as the infrastructure behind the Faster Payments Service (FPS). FPS lets you send real-time payments between UK bank accounts 24/7, including on weekends and holidays.

Most banks and payment providers in the UK connect to FPS, either directly or indirectly. If you’ve ever sent money through a banking app and the transfer happened right away, you probably used FPS.

FPS processes payments differently compared to traditional payment systems such as Bacs. Traditional payment systems work in batches and have scheduled settlement windows, while FPS processes transactions individually and in real time so they appear in the recipient’s bank account almost instantly.

FPS is operated by Pay.UK, the same nonprofit company that operates Bacs. The service is accessible to nearly all UK bank account holders, and certain nonbank financial institutions can connect to FPS directly by holding a settlement account at the Bank of England. This accessibility has driven improvement, particularly for fintechs.

FPS is used for everyday domestic transfers in British pounds, including one-off payments and standing orders up to £1 million. Banks can set lower limits for fraud prevention and internal risk management. In 2024, FPS processed about 5.1 billion transactions worth £4.2 trillion.

How does Faster Payments compare to CHAPS and Bacs?

Faster Payments is the fastest option for transferring money, but it also differs from the UK’s other core payment systems, CHAPS and Bacs, in other areas. Here’s how these three payment systems compare.

Speed

• FPS transfers usually clear in seconds. In rare cases, they can take up to two hours.

• CHAPS transfers typically clear the same day, as long as they’re sent before the bank’s cutoff time (often between 3:00 p.m. and 5:00 p.m.). If you miss the cutoff or initiate a transaction on a weekend or holiday, it will arrive the next business day.

• Bacs transfers usually take three business days to clear. If you initiate a Bacs payment on Monday, it will probably clear on Wednesday.

Availability

• FPS is available 24/7, including on weekends and holidays. It’s designed for continuous operation.

• CHAPS is available only during UK business hours, Monday through Friday. There’s no evening, weekend, or holiday processing.

• Bacs also follows a business day schedule. If you send a Bacs payment on a Friday, it will often clear on Tuesday.

Cost

• FPS usually costs more than Bacs but less than CHAPS.

• CHAPS often comes with the highest fees. That cost reflects its specialist role in moving large, time-sensitive transactions.

• Bacs is typically the cheapest option for businesses.

Use cases

• FPS is ideal for time-sensitive, low- to mid-value transfers (e.g., urgently paying a supplier, transferring money between your company’s accounts, issuing instant refunds to customers). It’s flexible, reliable, and fast.

• CHAPS is used for high-value, time-sensitive transfers, such as property purchases, large corporate transactions, and interbank settlements. The fee is justified when you need same-day settlement and can’t risk a delay.

• Bacs is used for predictable, low-urgency payments, such as monthly supplier payments and direct debits for utilities and subscriptions. It works best when payments are scheduled ahead of time and exact timing isn’t important.

Best practices for businesses that use Faster Payments

Faster Payments offers speed, reach, and flexibility, but using it well requires a clear understanding of how the system behaves in real-world conditions. If you’re building FPS into your workflows or relying on it to power core processes, these best practices will help you succeed.

Find out exactly what your infrastructure supports

Most UK banks can send and receive FPS transactions. To ensure your bank or payment provider is operationally ready, ask them a few questions, including the following:

• What are your FPS transaction and volume limits?

• Can we request a higher limit? What’s the process and timeline?

• Are any payments held for manual review?

• Are there any cutoffs or weekend restrictions on our account?

• What’s your application programming interface (API) availability or file submission workflow? Do you support real-time FPS initiation through an integration or only through a business portal?

You don’t want to discover at 4:59 p.m. on a Friday that your “instant” payout is being held until Monday. Confirm that your bank or payment provider can actually deliver what your business expects.

Use automation

Manually keying FPS transfers into a web interface is fine for occasional use, but it doesn’t scale well when you’re handling large volumes or time-sensitive transactions. If your business sends frequent or high-volume FPS payments, consider using:

• A direct bank API

• A secure uploading service with prevalidation

• A payment provider with API-level access to FPS

For example, Stripe uses FPS to power Instant Payouts to UK accounts, which results in real-time disbursements, lower error rates, and faster reconciliation.

Treat FPS transactions like cash

There’s no way to cancel an FPS transaction after the money leaves your account, so strong internal controls are important. At a minimum, build the following into your process:

• Dual approval for FPS payments above a certain value, especially if initiated by junior staff or through automated systems

• Payee verification steps, such as confirming receipt of a £1 test payment before transferring a large amount to a new account

• Confirmation of Payee checks, where available, to ensure the recipient account name matches the intended beneficiary

Train your team on common scenarios of push payment fraud, particularly business email compromise, fake supplier updates, and impersonated executives. These scams are designed to bypass standard processes in moments of pressure. There is a Credit Payment Recovery process that can sometimes recover FPS funds sent in error, but it’s time-consuming and doesn’t guarantee success. Prevention is more reliable than trying to undo a mistake after a transaction has cleared.

Rework reconciliation processes

Faster Payments also comes with structured metadata and instant visibility in most systems. That changes what’s possible in your accounting and operational workflows. Here’s how to take full advantage:

• Always include a meaningful payment reference. FPS supports up to 18 characters, which is enough to include an invoice number, order ID, or client code.

• Configure real-time notifications for inbound FPS credits, which some banks support through webhook integrations, and use those alerts to update systems automatically. For example, alerts might mark an invoice as paid or update a customer’s wallet balance.

These small process shifts can eliminate manual checks, minimize the end-of-day reconciliation load, and continually give your finance team an up-to-date view of cash movement.

Use a hybrid strategy

FPS is excellent for many use cases, but it’s not the solution for every payment flow. Most businesses use all three payment systems: they might use Bacs for routine payroll, FPS for refunds or corrections, and CHAPS for high-value acquisitions. Matching the system to the purpose gives you better control over cost, speed, and risk.

Monitor system changes

The UK payment system is changing. To stay ahead, you’ll want to monitor the New Payments Architecture (NPA), a new platform built to help modernize the UK’s payments infrastructure. The NPA will eventually consolidate FPS and Bacs, which will change how these payment systems work for businesses.