Faster Payments stalls among non-clearing banks

You still need to be aware of Institutions who purport to have signed up for Faster Payments but haven't implemented it properly. Capital One claim to have signed up, but still take 5 working days to apply Funds sent over from First Direct/HSBC to their Credit Card account, so the Capital One Account goes Overdue and gets hit for Interest Charges and other exorbitant Fees.

I feel I have to stand up for the banks when it comes to the fraud concerns of Faster Payments. True, some banks have implemented temporary solutions to manage fraud resulting from Faster Payments, but it is essential that people don't misunderstand ‘temporary' to mean ‘inadequate'.

Banks have to review their fraud prevention tools and processes on an ongoing basis, and regularly make changes to keep up with changing technology and changing fraud trends, and the UK banks are very experienced and capable of doing this. The banks that have gone live with Faster Payments were prepared for the changing nature of the fraud they would face, and made sure that they and their customers would be protected when it went live.

A good fraud prevention system is never permanent, it evolves and changes all the time. As the world around it changes, for example with chip and PIN, online banking, Faster Payments, SEPA or mobile banking, banks will expand their fraud strategies to encompass new channels and trends. That is one of the reasons we are seeing such a move towards real-time and enterprise fraud systems as banks combine information from many different sources to ensure they are as accurate as possible when preventing fraud.

Ultimately, it is the banks that are liable for fraud, not the consumer - so it is in their benefit to make sure their systems are as secure as possible.

Take up of the service has not "stalled", it was always the intent that FPS would go live with the 13 "founding banks" then have subsequent phases allowing other clearing banks to join as well as providing connectivity to third parties such as card companies (many of whom clear through other banks) and utilities to enable notification of payments alongside the actual fiscal transaction. In 2009 phase 2 will "go live" which will see the reach of FPS extend to smaller financial institutions (assuming they update their infrastructure) and to other third-parties.

The simple reason for this is that in order for a bank to send or receive Faster Payments, they have to be a clearing bank with the Bank of England (not a correspondent) and to have invested in the necessary infrastructure in order to be able to connect up and process Faster Payments.

Although I can appreciate the frustration some people may feel at an inability to use the service - perhaps still being charged large fees by their institution to make a CHAPS payment instead - if the industry had taken a "big bang" approach and not gone live until everyone everywhere was "reachable" the service would never have been delivered. Do not underestimate the technological challenges around creating an entirely new payment infrastructure are immense; not to mention one that operates in real-time (remember that although SEPA is also a new payment scheme, it used existing infrastructure and still takes 3 days to clear). The achievement in delivering this project is no less significant than it would be trying to build the M25 today if it did not already exist.

It might also be worth pointing out that as the person who proposed the original scheme, designed the initial architecture for FPS and chaired the bodies at APACS that oversaw the technical design and procurement of the service I think I am well positioned to know difficult it has been not to mention going from initial idea to a fully functioning service in three years.