18 Candles, 5 Billion Transactions. Faster Payments, We Salute You

A bold step into the unknown

The UK’s Faster Payments system was the world’s first modern real-time interbank payments system. It went live on 27 May 2008.

Real-time account-to-account payments are ubiquitous today throughout the world but eighteen years ago they were unchartered territory - no-one knew if there was any need for them.

Launching Faster Payments was a bold step into the unknown.

In the early 2000s, UK interbank payments operated on a three-day cycle and the UK banks were under pressure from the government (Office of Fair Trading) to speed them up.

In response, the UK banks toyed with a proposal to reduce the three-day cycle to same-day or next-day but in the end opted for real-time. They saw an opportunity to re-use existing technology in place for ATM withdrawals and debit card authorisations that was real-time. Also, they concluded that by going for real-time, they eliminated the risk of the government applying further pressure later on to speed up payments even more.

The project to design and implement Faster Payments started in 2005 and was driven by APACS, the banking trade association for payments at the time.

The original launch date for November 2007 was pushed back to May 2008. All participating banks had to go live together but some were struggling to meet delivery milestones.

Faster Payments was launched without fanfare. Few banks had much idea of how it would be used or what the demand would be outside of Sanding Orders. Although one bank made a point by making a £100 donation on the stroke of midnight on the launch date to the Disaster Emergency Committee to demonstrate money can move in real-time for crisis-response.

Read more on the story of the UK’s Faster Payments System here:

Is Faster Payments eating CHAPS's lunch?

When the UK's Faster Payments scheme raised its transaction limit from £250,000 to £1 million in February 2022, it gave high-value payments a new settlement route.

Studying the impact on CHAPS — the UK's real-time gross settlement scheme — the Bank of England have found strong evidence of substitution, with CHAPS volumes in the £250,000–£1 million range falling by an average of 10.7%–13.7%.

Substitution was most pronounced for customer credit transfers and lower-value payments.

The findings offer some of the first clear empirical evidence of meaningful migration from gross settlement to instant payment schemes, with significant implications for payment system operators and the future role of different settlement models.

Substack vs Kit?

Payments:Unpacked is published via the Substack platform with NewRPI and Paying Through Time are published on the (Convert)Kit platform - we are considering consolidating all Payments:Unpacked material on Kit and would welcome your feedback.

Please note if you have multiple subscriptions you may receive more than one email (apologies) - we will keep these duplications to a minimum as we evaluate migrating platforms:

Show us the money — the PSR turns its lens on Mastercard and Visa’s profits

The Payment Systems Regulator (PSR) is consulting on proposals to require Mastercard and Visa to report their UK financial performance, enabling the regulator to monitor and assess profitability over time.

The move follows the PSR's market review of card scheme and processing fees, which found that the schemes do not face effective competition, that scheme and processing fees have been rising, and that there is insufficient clarity on the fees businesses must pay to accept card payments — with evidence consistent with profit margins higher than would be expected in competitive markets.

To address this, the PSR is consulting on a targeted regulatory financial reporting remedy that would require both schemes to provide a profit and loss account for their UK card operations, alongside contextual information to help the regulator understand the financial performance of their respective UK businesses.

PSR Managing Director David Geale stated that scheme fees have risen substantially in recent years without clear evidence that the increases reflect underlying costs, and that the proposed reporting is designed to give the regulator a clearer picture of UK financial performance and the drivers behind it, with further intervention remaining a possibility if the market is found not to be delivering good outcomes for businesses and consumers.

Captain Mainwaring wants to look after your money

Don’t panic — he’s very good with figures. Probably.

In the 1970s, Barclays Bank decided that what their brand really needed was a man who spent his evenings pretending to be a self-important Home Guard officer who was wrong about nearly everything.

Arthur Lowe — forever Captain Mainwaring, forever affronted, forever slightly too big for his uniform — was apparently the face that said “trust us with your money.”

To be fair, it made a certain kind of sense: if Mainwaring could command a platoon of bumbling volunteers through the entire Second World War, surely he could handle a current account.

The advert played in cinemas, presumably before the main feature, giving audiences a few seconds to contemplate handing their wages to a man whose most famous catchphrase was directed at someone he considered a stupid boy.

Different times.

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The Government asks: Who did we leave behind?

The UK Government has commissioned an independent review — the Access to Banking Review — to examine the real-world impact of bank branch closures and determine whether further intervention is needed to protect consumers' access to in-person banking services.

The review will be led by Richard Lloyd, former director of Which? and former board member of the FCA, and will gather evidence on which groups and communities are most affected by the closure of branches, of which 6,719 bank and building society branches have closed across the UK since 2015.

The review will assess where further action may be needed, sitting alongside a forthcoming Financial Services and Markets Bill through which the Treasury intends to retain the power to intervene swiftly should the evidence support it. Richard Lloyd is expected to deliver his findings and recommendations to government by October 2026.

High Praise

Last week’s Payments:Unpacked led with high praise for the Bank of England from the Government’s Public Accounts Committee for the he Bank of England’s modernisation of its Real-Time Gross Settlement (RTGS) system stating that it was an almost uniquely successful example of public sector digital transformation.

Here’s a deeper dive into the report:

Trust is the infrastructure that money can't buy

Pay.UK's Chief Policy and Engagement Officer, Justin Jacobs, has appeared on the Payment Expert podcast to discuss how trust can be built and sustained in an increasingly complex payments landscape.

Justin highlighted the opportunities emerging from new payment rails and digital money — including programmable payments triggered by specific conditions, greater choice beyond cards, and improved cross-border experiences — while stressing that maintaining resilience and reliability across the ecosystem will be essential as these innovations develop.

Despite growing industry attention on tokenised deposits and stablecoins, he noted that consumers remain focused on more fundamental outcomes: payments that are fast, reliable, cost-effective, and well protected. On fraud, Justin pointed to the impact of Confirmation of Payee and the potential of enhanced data sharing to support earlier detection, alongside reimbursement frameworks as a backstop for consumer confidence.

Looking ahead, he emphasised that interoperability and cross-sector collaboration will be critical to avoiding fragmentation in a multi-money world, concluding that while significant change is coming, high levels of operational resilience and appropriate consumer protections must be maintained throughout.

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