Dining out on acronyms
We use abbreviations every day - in writing, texting, note-taking, talking and, of course, in payments.
There are a few different categories of abbreviations, and acronyms is one of them.
When you shorten a phrase by using just the first letter of each word and then pronounce it as a new word, you’re using an acronym.
Payments aficionados often dine out on acronyms with the first letters often replacing the full phrase.
It’s been a while since Direct Debits were processed by Bankers Automated Clearing Services or you purchased your house with a payment sent via the Clearing House Automated Payment Service.
It has been many years since both Bacs and CHAPS entered our vocabulary as clear derivations of long established payment scheme names.
Naming the new kid on the block
Back in 2006/7 a name was needed for a new kid on the payments block.
It was time to invent a name for the near real time payment system scheduled for introduction by the UK banks in May 2008.
Today’s global payments naming convention would have led to this new payment type to be christened Instant Payments but 2006/7 was a long time ago and, as a deferred net settlement (DNS) or Near Real Time (NRT) system with a SLA time of 2 hours perhaps an “instant” moniker would not have been appropriate.
For a time it looked like the new payment type might be called Immediate Payments but if “instant” didn’t work then it was unlikely that “immediate” would either. Also, an additional complication that was that Immediate Payments Limited wasn’t a company that the Payment System Operator (at the time CHAPS Clearing Company Limited) owned.
So with a distinct lack of creative innovation we ended up with a Faster Payment and an acronym of FPS - with the “S” being interchangeable between Service, System and Scheme!
Today, we all know Faster Payments (and don’t really care about what the “S” stands for) but did you know that, in 2008, the UK nearly ended up with what was referred to as a Scandinavian model designed to deliver a “same day Bacs1”?
The Swedish Model
The term “Swedish model” is referred to as the special institutional arrangements of a society that is sometimes described as a middle way between capitalism and socialism.
In the second half of the first decade of the 2000’s a different type of Swedish model was about to take centre stage for the “same day Bacs” payment type slated for launch in May 2008.
In response to the demand for a “same day Bacs” payment by Payment Systems Task Force set up by the Office of Fair Trading (OFT) the industry initially offered ELLE(Early for Late and Late for Early) where a payment submitted by midday would be delivered by close of business that day and one submitted after midday would be delivered by midday the next day.
However, in December 2005 the Payment Systems Task Force accepted an APACS2recommendation for a still more ambitious target on payment times to ensure access to funds within a couple of hours of any payment being made, and allowing payments to be sent 24 hours a day, 7 days a week, to be available by November 2007 (later amended to May 2008).
With the ELLE acronym ceasing to be relevant and naming options including instant and immediate not really working the industry opted for the easy option of a Faster (than Bacs) Payment - along with three variations of “S”.
And the rest, they say, is history
And the rest, they say, is history - interestingly despite the “couple of hours” translating into a two hour SLA the Faster Payment Scheme has actually delivered an instant or immediate transfer of funds between the remitter and the beneficiary (albeit with a deferred net settlement happening in the background) so, perhaps, an instant payments moniker could have been used instead of defaulting to a Faster (than what?) Payment.
Whilst the naming convention may leave a lot to be desired we should be thankful that sense prevailed and the “same day Bacs” design chosen was the Faster Payments Scheme / Service / System that we have enjoyed for the last 15 years - the UK would have been mush poorer with Elle.
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