Faster Payments
What Is Faster Payments? Definition and How It Works
Definition
Faster Payments is the UK's real-time interbank payment scheme enabling near-instant credit transfers between UK bank accounts 24 hours a day, 365 days a year, with funds typically available within seconds. It is the primary infrastructure underpinning UK Pay by Bank, Open Banking payment initiation, account-to-account e-commerce, and person-to-person transfers.
How it works
Faster Payments operates as a centralised clearing and settlement service run by Pay.UK, with infrastructure operated by VocaLink. Participating PSPs connect to the central infrastructure; settlement occurs across accounts held at the Bank of England.
A transaction: the payer instructs their bank to send a credit transfer; the bank submits the instruction to Faster Payments; the infrastructure validates, screens, and routes it to the receiving bank; the receiving bank credits the beneficiary. Over 90% of transactions complete in under 2 seconds.
Faster Payments is the rail over which Open Banking-initiated payments travel in the UK. When a consumer uses Pay by Bank at checkout and authenticates via their banking app, the PISP submits the payment instruction over Faster Payments through the consumer's bank's Open Banking API.
Why it matters
Faster Payments has been the foundation of the UK's digital payment ecosystem since 2008, enabling instant P2P transfers consumers treat as a baseline expectation, and powering Open Banking payment initiation as a card-cost alternative. The UK's advanced Open Banking infrastructure, built on Faster Payments, makes it one of the most developed A2A e-commerce markets globally.
For merchants, Faster Payments-backed Pay by Bank offers instant settlement confirmation at significantly lower acceptance costs than cards, typically 0.1%–0.5% versus 1.5%–2.5%. Faster Payments also underpins the growing Variable Recurring Payments ecosystem for UK subscription billing.
With PXP
PXP supports merchants and partners across the payments value chain. To talk through account-to-account payments as part of your payment strategy, get in touch with our team.
Frequently asked questions
What is the maximum transaction limit for Faster Payments?
The Faster Payments scheme maximum is £1,000,000 per transaction, though individual banks set lower limits for customers, typically £10,000 to £250,000 for personal accounts and higher for business accounts.
What is the difference between Faster Payments and CHAPS?
Faster Payments handles retail and business credit transfers up to the scheme limit, settling near-instantly 24/7. CHAPS is the UK's high-value same-day gross settlement system with no upper limit, operating during business hours. CHAPS migrated to ISO 20022 in June 2023.
How does Open Banking payment initiation use Faster Payments?
When a consumer selects Pay by Bank and authenticates via their banking app, their bank acts on the PISP's instruction and submits a Faster Payments credit transfer to the merchant's account. The PISP initiates payment through the bank's Open Banking API; the bank routes the instruction over Faster Payments. Settlement is near-instant.
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