How Faster Payments Works
When a customer makes a Faster Payment, it will generally work in the following way:
- Simon wants to pay his friend, Mike, who has an account with another bank.
- Simon instructs his bank through mobile phone, online or telephone to pay £50 today to Mike. Simon’s bank carries out its normal checks to verify that he is the genuine customer. For example, they may ask Simon to provide a password or other security information.
- In addition to Simon stating the amount he wants to pay, he also provides Mike’s sort code and account number – this is the information used to address the payment. Simon also enters the name of the account he wants to send the payment to, which will appear on his statement, and any reference details so that Mike knows what the payment is for.
- Before Simon’s bank allows the payment to be made, it will check that Simon’s account has sufficient funds and that the request to make a payment is genuine. In certain cases, the bank may need to hold the payment to undertake further fraud protection checks.
- Simon’s bank submits the transaction through the Faster Payments Service. From this stage onwards, the transaction cannot be cancelled.
- The Faster Payments Service sends the payment instruction to Mike’s bank (the ‘receiving bank’) after checking that all the relevant details are included and properly formatted, and then debits the sending bank.
- Once Mike’s bank has received the transaction, it checks that the account number is valid (note, it does not verify that the account name and number match), and then sends a message back to the Faster Payments Service that it has accepted (or rejected) the payment.
- The Faster Payments Service credits the receiving bank with the funds and sends a message to the sending bank to let them know that the transaction has been made successfully.
- Simon’s bank marks the transaction as complete. Each sending bank will decide how this confirmation will be made available to its own customer. In all cases, once the payment has been made, a confirmation message will always be sent between banks.
- Simon’s bank confirms the fate of the payment to Simon.
- The receiving bank will credit Mike’s account with the £50 sent by Simon.
Where Mike’s account is with a Faster Payment Member Bank, he should generally be able to see the credit on his account within minutes and also be able to access the funds. If Mike’s account is with a non-member of the Scheme, then it may take longer for funds to be shown on his account.
Note: The maximum value threshold for payments that can be processed through Faster Payments is £100,000 however individual banks set their own value limits for their consumer and corporate customers. Information on these value limits is available here. You can also check whether a specific sort code is able to receive Faster Payments here.