Who are Pay.UK and what do they do?
Issue 412 | 13 November 2022
Who are Pay.UK and what do they do?
As a reader of Payments:Unpacked you will know that payment systems are vital to the UK economy and play a remarkable role in ensuring that payment for the goods and services we all consume are efficient, safe, resilient and friction-free.
On its website home page the UK’s payment system regulator states:
Every time anyone uses a cash machine, transfers money, uses contactless, or gets paid, they use a payment system.
Payment Systems Regulator
In this context I am often asked ‘who are Pay.UK and what do they do?” - sometimes I think that the person asking the question ought to know the answer(!) but sometimes someone who has more recently appeared on the ‘payments scene’ has, not surprisingly, got a little bit confused.
So, using publicly available information sources, here’s a quick briefing:1
Who are Pay.UK?
Pay.UK is the recognised operator and standards body for the UK’s retail interbank payment systems. Pay.UK provide the digital payments networks used by the UK’s banks, building societies, other payment providers and all of their customers to make payments, ensuring they are secure, safe and simple to use.
Pay.UK was created in July 2017 (as the New Payment System Operator) and launched as Pay.UK in 2018, bringing the three national retail payment schemes – the Bacs Payment System, the Faster Payment System and the Cheque and Credit Clearing Company (now the Image Clearing System) – together, into a single, consolidated operation.
This act fulfilled a key Payments Strategy Forum recommendation: for the UK to have one retail interbank payment system operator.
What does Pay.UK do?
The core payment systems that Pay.UK operate are:
Bacs is the bulk system for high volume, regular interbank retail payments.
Direct Debit is the payment option chosen by thousands of companies to automatically and securely collect important payments, from millions of people and organisations. The Direct Debit Guarantee offered by Bacs is a unique end user benefit.
Bacs Direct Credit is used to pay eight in ten employees in the UK, whether that is wages, salaries, or benefits, as well as for settling business-to-business invoices.
In its fifty-first year (2021) Direct Debit experienced a new record with 4.6 billion transactions processed by the Bacs Payment System (2020: 4.5 billion transactions), a year-on-year increase of 2%.
In total, Bacs Debit and Credit processed 6.5 billion transactions, £5 trillion in value.
Faster Payment enables payments to be made in near real time.
Faster Payment is a near real-time system, with near real time confirmation to sender, and immediate funds availability.
The credit is normally posted to the beneficiary's account within seconds and there is a maximum payment limit of £1m.4
The Faster Payment System continues to set new volume and value records. In 2021, Pay.UK processed 3.4 billion transactions, a 17% increase on 2020, with a value of £2.6 trillion (2020: £2.1 trillion).
Image Clearing System
Image Clearing enables images of cheques to be exchanged for clearing and payment.
The introduction of the Image Clearing Service has significantly improved clearing process times following the closure of the previous Paper Clearing System in 2019.
If a customer pays in a cheque on a weekday (before their bank or building society’s advertised cut-off time) they will be able to withdraw the funds by 23:59 on the next working day. There is not a maximum payment limit for cheques.5
The Image Clearing System processed just 158 million items in 2021 (2020: 195 million items), including 153 million cheques (2020: 188 million cheques).
The continued decrease in cheque usage to an extent has been driven by end users migrating to alternative automated payment systems.
For the latest insight on cheque use in the UK read: Don't write off our cheques! (or has that ship already sailed?)
Pay.UK in numbers
In 2021 Pay.UK delivered operational availability at more than 99.9% and processed more than 10 billion retail payments with a value of just under £7.9 trillion.
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