Speed or Stability: Navigating Fast Payments and SWIFT for Quick Money Transfers

Article by: Nicholas Crouch - Casino Еxpert

Date Published: 30/11/23

The rise in electronic payment schemes that allow for fast, secure and affordable money transfers between bank accounts both inside the UK and internationally has made the act of moving money significantly easier over the years. In a largely cashless world, the peace of mind that comes with knowing your money is getting to a recipient quickly and safely is unmatched, which is why selecting the right fast payment scheme for your specific transaction is crucial.

Depending on the amount, the urgency and the type of transaction, UK bank account holders can choose between several quick money transfers. Some of these schemes are widely known and have been around for decades, such as Bacs and SWIFT, while newer methods like NPA and Image Clearing Systems are still being integrated. But how can you determine which one to use for your specific transaction?

We explore the advantages and disadvantages, as well as the time, cost and security of each scheme, to help you identify the best way to send your money.

BACS: Bankers’ Automated Clearing Services

BACS payments can be made between UK banks and are generally used to transfer large sums of money relatively quickly, although there are faster payment systems you can use to send your cash. BACS payments usually take a few days to reflect in the receiver’s bank account, but this payment scheme remains one of the most cost-effective and secure ways to send money. This is also the most commonly used type of fast money transfer for businesses.

As long as your payment isn’t urgent (it doesn’t need to be reflected in the receiver’s account on the same day it was sent), BACS is a front-running payment option. Recurring payments and debit orders, such as pensions and salaries, are generally transferred using this system. BACS payments can either be Direct Debit payments, where a fixed amount is pulled from the payer’s account on a specific day every month, or Debit Credit payments, where an outgoing payment is made regularly from the account for transfers such as salaries and pensions.

CHAPS: Clearing House Automated Payment System

CHAPS was innovated for the purpose of sending large, one-off payments that reflect immediately between UK bank accounts. These instant money transfers are generally sent to business accounts in cases where payment is urgent, such as putting down a deposit on a house or closing a significant business deal. While there was once a minimum payment amount required to make a CHAPS payment, this is no longer the case – however, low values are not often transferred using this method as the transaction cost can be substantial.

This is probably the biggest disadvantage of a CHAPS payment: the transaction fee is usually around £25, making it one of the most expensive instant cash transfer systems in the UK. However, for an urgent once-off payment, that’s a small price to pay to have your money reflected in the receiver’s account immediately. Plus, the process of making a payment is quick and easy to navigate, whether you choose to send money online, over the phone, or in a physical banking branch.

Faster Payments

Since 2008, Faster Payments has been steadily growing as one of the most commonly used fast money transfer methods amongst UK bank account holders. These UK-to-UK bank transfers are a fast way to send money as they can be reflected in the receiver’s account in a matter of seconds and are generally used to send smaller amounts of money. The efficiency of Faster Payments is also appreciated by fast payout casinos in the UK, offering quick access to winnings. The perfect combination of speed and affordability makes Faster Payments one of the more progressive payment methods, and its popularity in the UK continues to grow. Payments that can be made via this system include standing orders, one-off immediate payments, forward-dated payments, and direct corporate access payments.

Another advantage of Faster Payments is that this scheme allows you to send money on any day of the week, including bank holidays. However, it may not be suitable for large sums of money between businesses as different banking institutions have their own limits on the amount of money that can be sent using Faster Payments.

SWIFT: Society for Worldwide Interbank Financial Telecommunication

Perfect for sending money abroad, SWIFT payments can be made from a UK bank account to an international account via a series of banks which collaborate to ensure your money arrives safely in the receiver’s account. Because SWIFT payments employ the help of several intermediary institutions depending on where the money is being sent, it’s difficult to say exactly how long the payment might take to arrive. Senders can expect to wait anywhere between 3 and 5 business days for the payment to reflect, with some destinations taking longer.

SWIFT isn’t the cheapest option for international payments, with transaction fees of at least £25 per international payment. However, it is one of the most secure methods for sending money abroad. Generally, sending money internationally can be tricky, so the delay should be communicated to the receiver in advance.

ICS: Image Clearing System

Created with the purpose of replacing the paper-based clearing system of cheques and bank giros, the Image Clearing System (ICS) allows digital images of these physical documents to be sent between UK banks for money clearance.

Once a tedious practice, the act of receiving or sending money via cheque has now been made significantly easier, faster and more efficient with this banking innovation. ICS can be used for transactions made via sterling cheques, bankers’ drafts, travellers’ cheques, postal orders, warrants and the like. Basically, all physical expressions of payment can now be digitised and sent between banks. Payment can be accessed by the recipient within 1-2 business days, making this method relatively speedy and secure.

Safety vs Speed

When sending and receiving payments between UK banks, both time and security are of the utmost importance. Some systems, like BACS, take more time to verify transactions and check for fraudulent activity due to the large sums involved, but this, in turn, delays the payment. Other systems that deal with smaller payments don’t take such precautions, allowing payment to move faster.

BACS payments are secured through Bacstel-IP, an SSL-encrypted system that strongly protects all users’ data. Accessing this system requires a secure, encrypted password and is closely monitored to detect suspicious or potentially fraudulent activity. Impressively, BACS claims to have never misplaced a payment, bolstering its title as one of the most secure payment methods.

Operated by the Bank of England, CHAPS is also recognised as being a highly secure method of transferring money between bank accounts. Banking institutions must meet rigorous criteria and technical standards in order to gain access to this system.

Reports of fraudulent activity associated with payments made via Faster Payments have been increasing as the use of the system has steadily grown. However, this isn’t due to a lack of security around transactions themselves – usually, a sender agrees to pay the fraudster and sends the money quickly and easily via Faster Payments. Unfortunately, once this payment has been received, there is little the victim can do besides reporting it to their bank.

New Payments Architecture

As you can see from the options explored above, the UK’s current payment gateway architecture is versatile and complex, with each payment scheme offering its own set of limitations and opportunities. The New Payments Architecture (NPA) aims to streamline the act of sending money between UK banks through one main gateway that enables a wide range of transaction types.

The long-awaited NPA will modernise UK bank payments and ensure greater security and flexibility via one settlement system. The main promises of this system are speed, security and affordability, with the added bonus of boosting innovation and competition in the region. While this conceptual model has been in the works since 2015, various delays have prevented it from coming to fruition, but UK financial institutions are hopeful that we may see these changes soon.

Let’s Review

With all the current fast payment systems in place, UK banking customers have many options to choose from when it comes to sending both small and large sums of money to receivers in the region. However, being aware of transaction costs, time delays, security measures and the limitations of each method is essential to making the correct choice when sending your funds.

Hopefully, this informative and comprehensive guide makes your decision that much easier. If you’re still unsure, you can at least rest assured that the above systems are successful in making thousands of transactions across the country every day and are widely used by both businesses and individuals.