Faster Payments anniversary update

Guest blog post by Marc Terry, director of transaction services, VocaLink

Last Friday was the third anniversary of the launch of the UK’s Faster Payments Service. Last week also saw the one billionth transaction being processed. So, what better time to look at how far the service has come and what lies ahead?

When VocaLink set up and launched the service on its real-time infrastructure in May 2008 on behalf of CHAPS Co., it’s fair to say that it was considered a regulatory headache. However, transaction volumes have increased year on year on year. 80 million Faster Payments transactions were made in the first year, nearly 300 million in 2009 and over 400 million in 2010. This year we expect to see half a billion.

The service has caught on quickly with consumers too. Half of regular standing orders have already migrated and individuals using the system are making ten million more one-off payments every month than they did before the system was set up. That’s why 13 banks and building societies have now signed up to the service.

Looking to the future, banks should view the Faster Payments Service as a critical component to their payments strategy. It provides a significant opportunity to differentiate and deliver high levels of customer service. As well as continuing to encourage customers to take advantage of the service, banks should think laterally and use the channel to support payments innovation.

Through our pioneering work to develop the real-time payments infrastructure for faster payments, we are developing the technology for our mobile payments proposition.  The unique element of our proposition is to link bank accounts to mobile phone numbers so that payment can be made instantly, without the need for the payee to reveal bank account details. So, with consumers increasingly expecting anything done over mobile to be instantaneous, VocaLink’s real-time payments infrastructure can play a key role in the success of this initiative. In research we carried out last year, consumers and sole traders even said they’d be willing to pay for this service.

Looking beyond our borders, the roll-out of the Faster Payments Service has positioned the UK at the forefront of the industry’s most significant payment innovation in decades. Other countries across the world have been following developments closely and in the coming months we expect banks across Europe and beyond to look to reap the benefits of real-time payments.