Research shows that many businesses are unaware of a new electronic payments system widely touted as the biggest change in banking for decades.

Faster Payments, now due to launch at the end of May, will deliver near real-time payments over the phone or through online banking. It will also be used to make quicker standing order payments on bank working days.

It is not intended to completely replace electronic payments methods BACS or CHAPS but will run alongside them and is likely to be used in different scenarios, examples of which are given on the official Faster Payments website.

As a brief summary it’s expected that some CHAPS, some BACS, all standing orders and some existing internet banking or telephone banking payments may be replaced by Faster Payments.

CHAPS will continue to be used for house purchases or large and urgent company payments since Faster Payments has an initial upper limit of £10,000 to immediate transfers.

The system has been in development since May 2005, when the Payment Systems Task Force, chaired by the Office of Fair Trading (OFT), announced that an agreement had been reached with the banking industry to reduce clearing times and remove the resulting float of money that was temporarily held by the banks.

Originally due to launch in November last year, its introduction was then postponed to allow for more rigorous testing. Faster Payments will now go live in May.

Yet a survey, carried out by Southampton University in conjunction with Tall Group last summer, shows that the majority of businesses were still unaware of Faster Payments and how they should prepare for its introduction.

Less than one in four of the businesses who had heard of Faster Payments were aware of the specific features of the service, such as the £10,000 limit, the fact that it can only be used for sterling payments in the UK and that payments are irrevocable.

Sixty-four per cent admitted to having made no preparation for its introduction.

For large corporates and utilities the introduction of Faster Payments is likely to have a significant impact on their business.

The official Faster Payments website sums it up as follows, “Due to the fact that these companies receive large numbers of payments from individuals and commercial companies they will have to change their treasury and accounts receivable processes.”

It explains that this is because a large number of the payments currently made to these companies (e.g. standing orders, internet banking payments and telephone banking payments) will convert to Faster Payments.

“In addition these companies (and other large companies such as retailers) are high volume payers and there are a number of attractions to them to use Faster Payments for at least some of these payments,” the site continues.

Many SMEs may ask why this new payment system is relevant to them. The answer is twofold; firstly, customers are likely to be using it and that means businesses need to make sure that their systems are robust enough to accept payments by this method.

Any businesses that have not considered how they will deal with receiving Faster Payments should speak to their bank and consider whether any additional IT support and associated testing, is required.

Secondly, as consumers become more used to the concept of immediate payments, it is likely that they will adjust their expectations accordingly so that if money is owed to them they will, in certain circumstances, expect it credited to their account the same day.

A customer who is due a refund after a problem with their order, for example, or a situation where money needs to be paid to a customer at the weekend spring to mind.

So although, at least initially, the bulk of business payments may stay on an existing system such as BACS or cheque, Faster Payments may help to improve customer service and should not be ignored.

For those concerned about keeping track of these payments and ensuring full reconciliation, systems like the Tall Group's Checkprint Solution can help.

It provides a single interface for multiple payments methods including cheques, BACS, CHAPS and in due course Faster Payments.

The fees for making a payment using the new system will be decided by the individual banks and to date no banks have revealed what their charges will be.

Anyone looking for further detail about Faster Payments should visit the official website or APACS.

Launch day is close and with the research showing that even amongst those who had heard of Faster Payments many weren’t clear of the details - over half were confused as to when it was being launched with just 6 per cent having taken steps to prepare for its introduction – the time is ripe to take action.

Martin Ruda is managing director of  secure print and payment solution specialists The Tall Group.

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