Real-Time Payments: Implementing Faster Payments in the UK

The UK Faster Payments system processes billions in transactions daily. We explore how to integrate with this critical infrastructure and the technical considerations for real-time settlement.

The Faster Payments Landscape

Since launching in 2008, Faster Payments has transformed UK banking. Today it handles over 4 billion transactions annually, with payments typically settling in seconds rather than days. For fintech companies, access to this infrastructure is essential for competitive payment products.

But gaining access isn't straightforward. The options range from direct participation (expensive, complex, but maximum control) to agency arrangements through sponsor banks (faster to market, but with dependencies and costs).

Access Models Explained

Direct Participation

Direct participants connect directly to the Faster Payments infrastructure via the LINK network. This requires:

• FCA authorization as a payment institution or bank
• Membership of Pay.UK
• Settlement account at the Bank of England
• Significant technical infrastructure investment

The upfront cost runs into millions, but per-transaction costs are minimal. This makes sense for high-volume players.

Agency/Indirect Access

Most fintechs access Faster Payments through a sponsor bank. The sponsor handles the LINK connectivity and settlement, exposing an API to their agency customers. This approach offers:

• Faster time to market (weeks vs years)
• Lower upfront investment
• Simpler regulatory requirements
• Per-transaction fees that decrease with volume

Technical Integration Considerations

Whether direct or indirect, integrating with Faster Payments requires careful attention to several areas:

Message Formats

Faster Payments uses ISO 8583-derived message formats, though the industry is migrating to ISO 20022. Your integration must handle:

• Payment initiation messages
• Status responses and confirmations
• Return and recall flows
• Request to Pay messages (for newer services)

The 24/7/365 Challenge

Unlike BACS, Faster Payments never stops. Your systems must handle:

• Continuous availability requirements
• Maintenance windows without service interruption
• Monitoring and alerting around the clock
• Incident response at any hour

// Implementing a health check for 24/7 operation
class FasterPaymentsHealthCheck
{
    public function check(): HealthStatus
    {
        $checks = [
            'sponsor_connectivity' => $this->checkSponsorLink(),
            'message_queue' => $this->checkQueueHealth(),
            'settlement_status' => $this->checkSettlementPosition(),
            'response_latency' => $this->checkLatency(),
        ];

        return new HealthStatus($checks);
    }
}

Reconciliation

Real-time payments require real-time reconciliation. You cannot wait until end-of-day to discover discrepancies. Implement:

• Transaction-level matching as confirmations arrive
• Running position tracking against sponsor statements
• Automated alerting on breaks
• Audit trails for regulatory reporting

Common Pitfalls

From our experience, watch out for:

• Sort code validation: Not all sort codes participate in Faster Payments. Use the Extended Industry Sort Code Directory (EISCD) to check eligibility before attempting payments.
• Transaction limits: Individual transaction limits vary by participant. Design your UX to handle rejections gracefully.
• Return processing: Payments can be returned for various reasons. Your reconciliation must handle credits back to sender accounts.
• Timeout handling: A payment in 'pending' state requires careful handling—it might succeed, fail, or need investigation.

Conclusion

Faster Payments integration is a fundamental capability for UK fintech products. While the path through a sponsor bank is easier than direct participation, careful attention to message handling, 24/7 operations, and reconciliation is essential regardless of access model. The investment pays off in the ability to offer instant payment experiences that customers increasingly expect.