The future’s bright, the future’s Faster Payments

Issue 430 | 22 December 2022

The future’s bright, the future’s Faster Payments

In this final round up of retail payments in 2022, we see how the UK’s bulk clearing scheme is holding its own, compare double digit growth in instant payments with double dight decline in the last bastion of paper clearing and, we are grateful, that the UK’s real time gross settlement system remains a mystery to most of us as it keeps the financial markets functioning and helps us occasionally move house.

Note: All data is publicly sourced and is the latest available: Pay.UK November 2022.

Source: Pay.UK

Faster Payments

In the 12 months to the end of November 2022 we see that:

• Single Immediate Payment volumes have increased by 18% (12 months to October 19%)

• Total Faster Payment volumes have increased by 16% (12 months to October 17%)

• Single Immediate Payment values have increased by 27% (12 months to October 26%)

• Total Faster Payment values have increased by 24% (12 months to October 24%).

The meteoric rise in Faster Payments volumes continues bolstered by a switch from analogue to digital payments, the growing importance of Open Banking initiated Account to Account (A2A) payments and reflecting the increasingly digital society that we live in.

The widespread use of faster payments is a digital payment habit that will be here to stay, reinforced throughout each lockdown and with volumes and values continuing to increase month on month.

Although the trajectory has possibly flattened a little particularly when similar conditions have been in place, an overall significant increase year on year looks set to continue for some while to come – particularly with inflationary pressures also having an impact on the value of payments processed.

The UK’s Faster Payment scheme has been referred to as the “granddaddy of instant payment schemes” and to see 16% annual growth some 14 years after launch is amazing.

The future is certainly bright for Faster Payments – continued growth from Open Banking A2A payments, payments initiated by overlay services such as Request to Pay and Variable Recurring payments is certainly on the agenda. The growth is likely to be bolstered through the introduction of new Faster Payment types (or flavours) as part of version 1.0 of the planned New Payments Architecture and, perhaps, through a future planned migration of Bacs Direct Credit payments into the NPA.

A long time ago the mobile telco Orange claimed that “the future’s bright, the future’s orange” – with an annual volume of just under 4Billion transactions maybe “the future’s bright, the future’s Faster Payments”.

Faster Payment volumes over the last 12 months total 3.9Billion, this now equates to almost exactly 50% of the volume processed by the UK’s bulk ‘push’ scheme (Bacs Direct Credit).

Bacs Direct Debit and Direct Credit

In the 12 months to the end of November 2022 we see that:

• Bacs Direct Credit volumes have increased by 2% (12 months to October increased by 1%)

• Bacs Direct Debit volumes have increased by 3% (12 months to October increased by 3%)

• Total Bacs volumes have increased by 2% (12 months to October increased by 2%)

• Bacs Direct Credit values have increased by 4% (12 months to October increased by 3%)

• Bacs Direct Debit values have increased by 8% (12 months to October increased by 8%)

• Total Bacs values have increased by 5% (12 months to October increased by 4%).

Notwithstanding the continued double digit growth in Faster Payments we round out 2022 with Bacs Direct Credit growth of 2% – with just shy of 2Billion ‘push’ payments processed via the Bacs schemes over the last twelve months.