How does the Faster Payments Service work?
When a customer makes a Faster Payment, it will generally work in the following way:
1. Sean wants to pay his friend, John, so phones his bank or logs on to his online banking service and instructs his bank to pay £35 today to John whose account is with another bank. Sean’s bank carries out its normal checks to verify that he is the genuine customer. For example, they may ask Sean to provide a password or other security information requested when banking online.
2. Sean can check what amount of money his bank will allow him to send through the Faster Payments Service by checking the Value Limits table. He can also use the Sort Code Checker to ensure that John can receive the money this way.
3. Sean provides the name, sort code, account number and any reference details that need to be included to ensure the payment reaches the correct account. It is important Sean ensures that John’s bank details are correct.
4. Before Sean’s bank allows the payment to be made, it will check that Sean’s account has sufficient funds and that the request to make a payment is genuine. In certain cases, delays can occur if the bank needs to undertake further fraud protection checks.
5. The bank submits the transaction through the Faster Payments Service. From this stage onwards, the transaction cannot be cancelled.
6. The service sends the payment on to the receiving bank after checking that all the relevant details are included and properly formatted, and then debits the sending bank.
7. Once the receiving bank has received the transaction, it will check that it’s for a valid account, and will send a message back to the Faster Payments Service that it has accepted the payment. Or indeed, that it has rejected the payment.
8. The Faster Payments Service credits the receiving bank with the funds.
9. The Faster Payments Service tells the sending bank that the transaction has been made successfully.
10. Sean’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.
11. The receiving bank will credit John’s account with the money received.
John should be able to access funds within a couple of hours of a payment being made but at any stage either the sending or receiving bank may carry out additional checks on transactions, which could delay a small number of payments.
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.