What is the Faster Payments Service?

The Faster Payments Service (FPS) is the UK's instant bank-to-bank payment rail. It launched in 2008, replaced Bacs telephone-and-internet transfers as the default way to send small to mid-sized amounts between UK accounts, and is now operated by Pay.UK. Most payments arrive in under 10 seconds. The service runs 24 hours a day, seven days a week, every day of the year, with no batch cut-off. The per-transaction limit was raised from £250,000 to £1 million in February 2022, although individual banks can set their own lower customer-facing limits.

If you've ever sent money in your banking app and it appeared in the recipient's account by the time you put your phone down, that ran on Faster Payments. So did the Pay-by-Bank transfer you made at checkout, the salary your employer paid on a Sunday, and the refund a retailer pushed back to your account at 11pm. The rail is so ubiquitous now that most people don't think of it as a thing — they just expect their bank to move money instantly.

How Faster Payments works

FPS is a real-time gross settlement-style rail, but with a deferred net settlement model behind the scenes. From the customer's point of view, a payment goes through in seconds: the paying bank checks the funds, the receiving bank credits the account, and a confirmation comes back. Behind the scenes, the banks reconcile and settle the net positions among themselves several times a day through accounts held at the Bank of England.

The participants are direct members of the scheme (the major banks and a growing number of challenger banks and payment institutions) and indirect participants who access FPS through a sponsor bank. There are around 40 direct participants today, up from a handful at launch — the rule changes that opened up direct settlement to non-banks in 2017-2018 brought in Monzo, Starling, Wise, Modulr, and others.

Every Faster Payment carries a payment reference, an amount, a sort code and account number for the recipient, and metadata about the initiating customer. The receiving bank applies Confirmation of Payee checks where applicable and either credits the account or returns the payment.

Limits

The scheme limit is £1 million per transaction (raised from £250,000 on 7 February 2022). That's the maximum the rail itself will carry. Individual banks set their own customer-facing limits below that — most retail current accounts are capped at somewhere between £25,000 and £1 million per transaction depending on the bank and the channel (mobile app, online banking, or branch). For amounts above £1 million, the alternative is CHAPS, which is the Bank of England's high-value same-day rail.

Confirmation of Payee

Confirmation of Payee (CoP) is the name-checking layer that sits on top of Faster Payments. When you set up a new payee in your banking app, your bank queries the receiving bank with the name you typed and the account number you entered. The receiving bank checks the name against its records and returns one of three answers: match, close match, or no match. CoP doesn't block the payment — it just gives you a warning before you press send.

CoP was rolled out across the CMA9 banks in 2020 and has since been extended to most direct FPS participants under a phased mandate. It's the main defence against authorised push payment (APP) fraud, where someone is tricked into sending money to a fraudster's account by being told the wrong name or sort code.

Faster Payments vs Bacs vs CHAPS

The UK has three main domestic interbank rails, and they exist for different jobs.

Faster Payments moves money in seconds, 24/7, up to £1 million per transaction. It's the default for instant transfers, push payments, and Pay-by-Bank checkouts.

Bacs moves money on a three-working-day cycle. It's the rail behind Direct Debit and Bacs Direct Credit (the system most UK employers use to pay salaries). Bacs is cheaper per transaction than FPS at scale, which is why bulk payments like payroll and pension instalments still run on it. Pay.UK runs both schemes.

CHAPS is the Bank of England's same-day high-value rail. It has no upper limit, settles in real time on the Bank's books, and is the standard for property completions, treasury movements, and corporate payments above the FPS ceiling. It's also significantly more expensive per transaction.

Faster Payments and Open Banking

When a customer uses Pay-by-Bank or a Variable Recurring Payment, the actual payment moves over Faster Payments. The Open Banking layer is the consent and authentication wrapper that lets a third-party initiator (an Open Banking provider, a merchant's payment platform) tell the customer's bank to send the money. The customer authenticates with their bank using Strong Customer Authentication, the bank initiates the Faster Payment, and the recipient is credited within seconds.

This is why Pay-by-Bank checkouts settle instantly: there's no card network in the middle, no day-end batch, no holding the funds. The merchant sees the money in their account within seconds, with a clear payment reference so they know which order to allocate it against.

How FPS compares internationally

Faster Payments was one of the first real-time interbank rails in the world when it launched in 2008. Other countries have followed. The US has FedNow (Federal Reserve, live since 2023) and The Clearing House's RTP network (live since 2017). The eurozone has SEPA Instant Credit Transfer (SCT Inst), live since 2017. Brazil has Pix (live since 2020, now arguably the most successful instant-payments rollout anywhere). India has UPI. Each has its own scheme rules, but the consumer experience is similar: tap, authenticate, money arrives.

FPS is operationally older than most of these, which is both a strength (proven, ubiquitous) and a weakness (some of the underlying technology is showing its age). Pay.UK has been working on the New Payments Architecture (NPA) since 2018 to consolidate and modernise the UK's retail rails, but the timeline has slipped repeatedly and the current focus is on incremental upgrades to FPS itself rather than a wholesale platform replacement in the near term.