GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
PAYMENTSSIGNAL

The interactive academy for the standards, messages, and rails that move money.

GET IN TOUCH
FOLLOW THE PAYMENT

Faster Payments (FPS)

A pound transfer that reaches the payee within seconds, around the clock — but the banks settle their net positions in central bank money later, on a deferred cycle. Instant for the customer, deferred-net for the banks.

Reference card →
Your notes

Contributor Shubham Mathure

STEP 1 / 8MESSAGE

Riya asks Bank Alfa to pay Arjun

Riya (payer) → Bank Alfa (sending bank)

On a Sunday evening Riya opens her banking app and instructs Bank Alfa to send GBP 500.00 to Arjun at Nordbank. Faster Payments runs 24/7, so time of day does not matter. Nothing has moved yet — this is only a request.

Step 1 of 8: Riya asks Bank Alfa to pay Arjun

  1. 01Message
    Riya asks Bank Alfa to pay ArjunRiya (payer) → Bank Alfa (sending bank)
  2. 02Processing
    Bank Alfa checks the payment in real timeBank Alfa (sending bank)
  3. 03Posting
    Bank Alfa debits RiyaBank Alfa (sending bank)
  4. 04Message
    The payment goes through Faster Payments in real timeBank Alfa (sending bank) → Faster Payments (Pay.UK)
  5. 05Message
    Nordbank receives the payment within secondsFaster Payments (Pay.UK) → Nordbank (receiving bank)
  6. 06Posting
    Nordbank validates and credits Arjun within secondsNordbank (receiving bank)
  7. 07Processing
    Arjun can spend the money immediatelyNordbank (receiving bank) → Arjun (payee)
  8. 08Settlement
    Later, the banks settle their net positions at the Bank of EnglandFaster Payments (Pay.UK) → Bank of England (settlement)
MESSAGECLEARING OBLIGATIONSETTLEMENTPOSTING
Full step-by-step text (works without JavaScript)
  1. 01Message
    Riya asks Bank Alfa to pay ArjunRiya (payer) → Bank Alfa (sending bank)

    On a Sunday evening Riya opens her banking app and instructs Bank Alfa to send GBP 500.00 to Arjun at Nordbank. Faster Payments runs 24/7, so time of day does not matter. Nothing has moved yet — this is only a request.

  2. 02Processing
    Bank Alfa checks the payment in real timeBank Alfa (sending bank)

    Bank Alfa validates the account details, confirms Riya has the funds, screens for sanctions, and checks the amount against the FPS single-payment limit and its own limits — all in seconds, because the customer is waiting.

    Screening checkpoint: Real-time transaction screening — Near-real-time rails force screening to be fast and automated — there is no overnight batch window to absorb the delay.

  3. 03Posting
    Bank Alfa debits RiyaBank Alfa (sending bank)

    Bank Alfa reduces Riya's balance by GBP 500.00 on its own books. The money has left Riya, but Arjun does not have it yet and the banks have not settled — those are separate steps.

    • DR Riya's current account at Bank Alfa — GBP 500.00
  4. 04Message
    The payment goes through Faster Payments in real timeBank Alfa (sending bank) → Faster Payments (Pay.UK)

    Bank Alfa submits the payment to the central Faster Payments infrastructure, which routes it to Nordbank immediately. This real-time clearing leg carries the instruction — it does not move central bank money.

  5. 05Message
    Nordbank receives the payment within secondsFaster Payments (Pay.UK) → Nordbank (receiving bank)

    Faster Payments forwards the payment to Nordbank in real time and expects a fast answer. The message tells Nordbank exactly whose account to credit and with how much.

  6. 06Posting
    Nordbank validates and credits Arjun within secondsNordbank (receiving bank)

    Nordbank checks the beneficiary account, screens the payment, and credits Arjun on its own books — all within seconds of Riya pressing send. Nordbank now owes this money and will recover it from Bank Alfa at settlement.

    • CR Arjun's current account at Nordbank — GBP 500.00
  7. 07Processing
    Arjun can spend the money immediatelyNordbank (receiving bank) → Arjun (payee)

    Arjun sees GBP 500.00 in his account and can spend it straight away, even though the banks have not yet settled between themselves. This gap — payee paid now, banks settled later — is the exposure Nordbank carries.

  8. 08Settlement
    Later, the banks settle their net positions at the Bank of EnglandFaster Payments (Pay.UK) → Bank of England (settlement)

    On a defined settlement cycle — after Arjun already has the money — Faster Payments calculates each bank's net position and the banks settle those net amounts in central bank money across their Bank of England settlement accounts. This is deferred net settlement, not payment-by-payment RTGS.

    FPS clears in real time but settles on a deferred, netted basis. Only one net figure per bank per cycle moves at the Bank of England — not GBP 500.00 on its own.

    • DR Bank Alfa net position at the Bank of England — GBP 500.00 (as part of the net cycle)
    • CR Nordbank net position at the Bank of England — GBP 500.00 (as part of the net cycle)

What this simplifies: Faster Payments clears in real time but settles deferred-net at the Bank of England; this diagram shows a single settlement leg and abstracts the exact number of daily settlement cycles, plus the detailed CHAPS reroute mechanics.

LEARN THE CONCEPTS BEHIND THIS FLOW

Sources for this flow2
  1. Scheme-specific rule

    Faster Payment System (FPS) ↗ — Pay.UK

    Describes the UK Faster Payment System, operated by Pay.UK: near-real-time retail credit transfers in sterling, available 24/7, cleared in real time and settled on a deferred net basis across settlement accounts at the Bank of England. · Checked 2026-07-14

    Interbank settlement in FPS is deferred net at the Bank of England — the customer experience is instant, but the banks settle net at defined cycles, not payment-by-payment. Not an RTGS system.

  2. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: One net settlement leg stands in for the scheme's defined cycles; the exact number and timing of daily settlement cycles at the Bank of England are abstracted, and the CHAPS reroute is shown in outline.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.