What is Faster Payments? A complete guide for UK businesses

Faster Payments is the backbone of real-time bank transfers in the UK. For finance teams, accountants, and platform businesses, it enables money to move between bank accounts in seconds, not days. That speed is transforming how organisations manage payroll, supplier payments, customer refunds, and time-critical disbursements.

This guide explains what Faster Payments is, how it works, where it fits alongside other UK payment schemes, and why it has become a critical rail for modern, automated finance operations.

What is Faster Payments?

Faster Payments is a UK interbank payment system that allows near-instant electronic transfers between bank accounts. Payments are typically completed within seconds and are available 24/7, including weekends and bank holidays.

Launched in 2008, Faster Payments was designed to replace slower, batch-based transfers for everyday payments. Today, it underpins millions of business and consumer transactions every day, from paying staff and suppliers to instant refunds and account transfers.

For businesses, Faster Payments means:

• Immediate availability of funds
• No dependency on banking cut-off times
• A reliable way to move money in real time

How does Faster Payments work?

At a high level, Faster Payments moves money directly between UK bank accounts using sort codes and account numbers. The process looks like this:

1. Payment instruction
   A business or individual submits a payment through their bank, payment provider, or integrated software platform.
2. Validation and checks
   The sending bank validates the payment details and runs fraud and compliance checks, including Confirmation of Payee where applicable.
3. Real-time clearing
   The payment is sent via the Faster Payments infrastructure to the receiving bank.
4. Immediate credit
   The receiving bank credits the beneficiary’s account, usually within seconds.

Unlike batch systems, Faster Payments does not wait for end-of-day processing. Each transaction is handled individually and in real time.

Faster Payments vs other UK payment methods

Understanding where Faster Payments fits requires comparing it with other UK schemes.

Faster Payments sits between Bacs and CHAPS. It offers near-instant settlement like CHAPS, but without the high fees, and it operates continuously, unlike both Bacs and CHAPS.

Why Faster Payments matters for businesses

For many organisations, Faster Payments is no longer a nice-to-have. It is fundamental to how modern finance teams operate.

1. Improved cash flow control

With Faster Payments, funds leave and arrive instantly. Finance teams gain real-time visibility over balances, making it easier to manage working capital and reduce idle cash.

2. Time-critical payments

Use cases such as payroll corrections, supplier top-ups, insurance payouts, or lender disbursements depend on certainty and speed. Faster Payments removes delays that can damage trust or operations.

3. Reduced operational friction

There is no need to manage cut-off times, payment files, or multi-day settlement windows. Payments can be triggered automatically when approvals are complete.

4. Better customer and supplier experience

Instant payments mean employees are paid on time, suppliers receive funds when promised, and customers get refunds without waiting days.

Common Faster Payments use cases

Faster Payments supports a wide range of business payment flows:

• Payroll and contractor payments: Pay staff instantly, including same-day or off-cycle payroll.
• Supplier payments: Settle invoices immediately to improve supplier relationships.
• Lending and wage advance: Disburse funds to customers in real time.
• Refunds and reimbursements: Return money instantly to customers or employees.
• Platform payouts: Enable real-time settlements for marketplaces and platforms.

These use cases are especially important in sectors such as travel, lending, payroll, and accounting, where timing and reliability directly affect customer experience.

Limits and considerations

While Faster Payments is powerful, there are a few points finance teams should understand:

• Transaction limits: Individual banks apply their own limits per payment, which can vary significantly.
• Irrevocability: Once sent, Faster Payments are difficult to reverse. Strong controls and validation are essential.
• UK-only: Faster Payments is a domestic scheme and cannot be used for international transfers.

These factors make automation, approval workflows, and data validation critical when using Faster Payments at scale.

Faster Payments and payment automation

Faster Payments delivers speed, but the real transformation comes when it is embedded into automated workflows.

When integrated into accounting, payroll, or ERP systems, Faster Payments enables:

• Automated payment runs triggered by approvals
• Real-time reconciliation using unique references
• Reduced manual processing and error rates
• Consistent audit trails and controls

This is where payment automation platforms play a crucial role. By combining direct access to Faster Payments with APIs, integrations, and workflow controls, businesses can move beyond manual bank portals and file uploads.

How Modulr enables Faster Payments at scale

Modulr provides direct access to Faster Payments as part of its payments automation platform. This allows businesses to send and receive real-time payments programmatically, securely, and at scale.

For finance teams and accountants, this means:

• 24/7 Faster Payments without relying on bank portals
• Automated payment execution from accounting and payroll software
• Configurable approval workflows and role-based controls
• Real-time status updates and reconciliation

By embedding Faster Payments directly into finance operations, Modulr helps businesses improve efficiency, accuracy, and control, while enabling scale as payment volumes grow.

Key takeaways

• Faster Payments is the UK’s real-time account-to-account payment scheme.
• Payments typically settle in seconds and are available 24/7.
• It is ideal for payroll, supplier payments, disbursements, and refunds.
• Compared to Bacs and CHAPS, Faster Payments offers a balance of speed, cost, and availability.
• When combined with automation and integrations, Faster Payments becomes a foundation for modern finance operations.