Within just a few seconds, fund managers with operations in the UK can quickly and reliably process payments using the UK Faster Payments Service (FPS). Compared to other payment types, there are several advantages to using this method, such as quicker processing time and lower cost. However, there is also a level of risk involved as one small error can result in a payment that cannot be reversed or cancelled – underscoring the need for an automated cash management solution.
An Overview of the Faster Payments Service
For UK fund managers, the Faster Payments Service provides a quick, secure and low-cost method for processing payments. It is available to more than 52 million account holders in the UK, with 35 directly connected participant organizations and 400 financial institutions supporting the service.
Faster Payments reduces the time from initiation to final receipt as well as provides fund managers with simplicity and security through end-to-end encryption and automation. It can be accessed directly through a banking portal, API and/or SWIFT MT standard message.
How Faster Payments Works
Risks and Limitations
The main risk associated with this method is that a payment, once sent through, cannot be reversed or cancelled. This makes it critical for managers to have additional checks and controls in place to ensure that the risk of human error is reduced given that their money will move within seconds. Additionally, there are limitations with Faster Payments regarding how much money can be transferred. The maximum amount is £250,000, but this will depend on the organization offering the service.
For banks, challenges increase multifold due to the fact that the total processing time for each payment is very short. Performing anti-money laundering checks, reporting and other crucial regulatory checks in real-time is risk-prone and requires state-of-the-art infrastructure for all parties involved.
IVP Cash Master provides seamless integration with the Faster Payments Service through SWIFT and API. Using this automated solution, fund managers can create FPS wires with less than 10 clicks and move money to a desired location within seconds. To reduce the risk of human error, IVP Cash Master has a complete workflow-based control so that wires can pass through a minimum of four checks prior to execution. It also supports the loading of BACS faster payment files directly into the system for processing – reducing the need for human intervention and, therefore, any additional associated risks.