Faster Payments volumes surge

Britons sent two-thirds more money through Faster Payments in the last three months of 2011 than in the fourth quarter of 2010, as the much maligned service took root.

According to Payments Council figures, more than £76 billion was sent during the fourth quarter, up from £46 billion in Q4 2010. A total of 144 million Faster Payments were made during this period, a 23% rise.

Faster Payments, a multi-million pound system, developed by VocaLink and backed by 13 clearing bank members, went live in 2008, enabling Brits to make near real-time transfer of phone, Internet and standing order payment instructions.

It struggled to gain traction, with member banks taking a cautious, phased approach to rolling the system out, prompting criticism from the Office of Fair Trading the following year.

However, with European legislation coming into force in January that effectively made Faster Payments the default system for processing online, phone banking and standing order payments in the UK, progress has accelerated.

To prepare for the legislative change significant work was completed during 2011 to increase the reach of the service - 99.9% of UK sort codes can now send and receive Faster Payments. By December 2011, four out of five standing orders were sent using the service, compared to 64% a year earlier.

Faster Payments is also a linchpin for new mobile services, such as Barclays Pingit and its upcoming Payments Council-developed, industry-wide imitator.

The Payments Council figures also show that 2011 was a record year for ATM withdrawals, with Brits taking out £191 billion in 2.87 billion visits to Link network machines.

In contrast, cheques continue their inexorable decline, with only 682 million cleared in 2011, a 12% fall on the previous year. The closure of the cheque guarantee card scheme in June "appeared to have little impact on the rate of decline" though.

Despite their falling popularity, the Payments Council was forced last year to carry out an embarrassing u-turn on plans to abolish cheques by 2018 under huge public and political pressure.

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Comments: (1)

A Finextra member 22 March, 2012, 14:24

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Over the past few years, organisations across the board have streamlined processes and gained significant cost efficiencies. They have also embraced electronic payments in their many guises, from Bacs through Faster Payments to Direct Debits. Indeed, the recent figures from the Payments Council as quoted in this article highlight the increasing uptake of Faster Payments in comparison to the decline in cheques payments.

However, this is largely due to consumers, organisations themselves could be doing so much more to increase efficiency and minimise unnecessary cost. Faster Payments can now be accessed from the same system as the traditional Bacs offering, enabling companies to make the right choices for the right reasons when it comes to payments. Gone are the times when disparate systems could sustain the modern business. To retain a competitive edge and maximise operational efficiencies all businesses should be taking a consolidated, strategic approach to payments, and embracing a single, centralised platform that offers choice.

Cheques in business are a dying breed. They are costly, resource intensive and they embrace paper. Even with the Payments Council about turn, cheques in business should be a thing of the past with Bacs and Faster Payments providing the payment mechanisms of the here and now, as part of a single, consolidated payment solution.