From May 2008, customers can make payments via the Internet or telephone banking up to a limit of GBP10,000 that will reach the bank account of the beneficiary or payee within two hours.

The Faster Payments service will be available 24 hours a day, seven days a week and will cost significantly less than the UK's current same-day, real-time gross settlement system, CHAPS. It is likely that the speed and cost of this new faster payment service will attract payments normally sent via CHAPS or BACS.

• Although this important change in the UK's payment systems was primarily intended to improve the service delivered by banks to consumers and small businesses, it is now clear that companies of all sizes will benefit.
• The introduction of Faster Payments looks set to herald wider corporate adoption of lowest-cost payment routing solutions, dependent on urgency, currency and value. Corporates that already enjoy the cost and flexibility advantages of direct access to BACS, will also have direct access to Faster Payments (albeit only on business days) this will affect sterling and euro payments across the EU.

To take advantage of Faster Payments, corporate treasuries should put their planning now for Faster Payments on a par with their SEPA strategy. There are three steps companies should take in the short term to assess using the Faster Payments scheme.
Step 1

• Investigate how many sterling CHAPS payments they currently make for a value below GBP10,000 and how much they are currently being charged by their bankers for making them. This will form part of the business case for change, since for this category of payments the move to Faster Payments is a clear opportunity to reduce bank charges.

Step 2

• Consider how many of their existing cheques or three-day cycle BACS payments would benefit from being paid more quickly, albeit at a higher price than today.
• Assess the clear tangible benefits from completing faster vendor payments to obtain an early payment discount, with the ability to settle salaries of employment agencies weekly, knowing how many hours and days have been completed.
• Realise that working capital management can be enhanced by delaying payment decisions until the settlement date, rather than initiating sterling payments three days in advance under BACS

Step 3

• Corporates with large volumes of payments should consider direct corporate access to Faster Payments. Those with few payments can also access Faster Payments through a bureau or via their bank's e-banking solution.
• Faster Payments, alongside SEPA, may lead increasing numbers of companies to conclude that to achieve lowest cost routing, they’ll want direct corporate access through a number of clearing systems:
• BACS,
• Faster Payments
• Interpay for pan-European euro payments, plus
• multi-bank connectivity (via SWIFT's new corporate access multi-closed user groups)

and all from a single payment factory platform that would ensure pan-enterprise visibility, security and control.