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Faster payments, also known as instant payments, real-time payments, or quick payments, is a system that allows business owners to access the money they receive from customers in real-time or much faster than with traditional payment methods.
This allows them to receive money from customers almost instantly, pay suppliers or employees quickly, and manage their cash flow more efficiently.
In this guide to understanding faster payments, we’ll explain how you can choose a good payment system for you, integrate it into your business operations, boost cash flow and enhance payment security.
Why do businesses need quick payments? Because traditional payment methods often fall short when it comes to meeting the urgent financial demands of SMEs.
For example, if an ecommerce venture experiences a sudden peak in sales, the time it takes other payment systems to clear transactions (often several days) may create a bottleneck that prevents the company from restocking its inventory swiftly.
This delay can affect customer satisfaction due to prolonged shipping times.
It may also limit cash flow, stunting potential expansion opportunities.
Faster or real-time payments refer to a set of electronic payment systems and services that enable near instantaneous or significantly accelerated money transfers between individuals, businesses and financial institutions.
Not only are these payments quick (clearing in 30 minutes or less) but they are also highly secure and convenient and can provide seamless integration with other financial reporting systems.
By enabling efficient transactions with rapid fund transfers, businesses can empower effective cash flow management and help maintain good relationships with customers, staff and suppliers.
Integrating faster payment solutions can also help boost cash flow and enhance payment security.
Financial institutions are not the only route into real-time payments, although many do offer their own real-time payment systems to customers.
Payment processors provide merchants with easy-to-use payment processing solutions.
There are many options out there for a faster payment system, so it is important to decide how it will be used.
An important consideration should be that the payment system offers the features that a business requires.
Faster payments give your business near‑instant access to funds (typically within seconds or minutes) so you can better manage expenses such as stock, wages or emergency repairs without delays. One practical benefit of faster payments, however, is that fewer days waiting for money to clear also makes it easy to reinvest in the business or cover unexpected costs.
Speed and convenience go hand-in-hand when it comes to generating repeat custom.
When orders are processed as soon as customers pay, they enjoy fast confirmations and dispatch times, which can be critical in ecommerce, where swift service builds trust and brand loyalty.
Instant payments mean you can respond instantly to needs like restocking or urgent supplier payments.
Real‑time payments help small businesses maintain smooth day-to-day operations and business continuity during peak demand and adapt dynamically to the increasingly fluctuating demands of global markets.
Automated faster payments reduce the need for tiresome and costly manual work like account reconciliations or bulk order processing and dramatically speeds up the processes too.
Direct corporate access also lets you batch-process multiple payments in one go, freeing up time, reducing costs and boosting administrative efficiency for growing SMEs.
Faster payments can be made for four different types of transactions.
These are the most common type, initiated as one-off payments by customers, via mobile banking, online banking, phone banking or in a bank branch.
These one-off payments are sent and received on a predetermined date decided by the customer. An example of their use would be paying a utility bill.
These regular payments of a set amount are sent on regular dates, for example, on the first day of the month. These are usually used for subscription services.
A service for business customers in which payment instructions can be sent directly in the form of bulk files.
This can greatly reduce the administrative burden on SMEs, with the same processing time and transaction limits as other payment types.
It’s important for small businesses to understand the differences between the main methods of making and receiving payments. Here is a review of Faster Payments and CHAPS.
The Faster Payment System, available at all hours 365 days a year, facilitates real-time payments of up to £1m – initiated primarily online, mobile or via telephone banking. It is made possible by the range of banks and financial institutions connecting safely and securely either directly, or indirectly, to the Faster Payment system’s infrastructure.
CHAPS stands for Clearing House Automated Payment System. It is operated by the Bank of England. It offers a guaranteed same-day payment system but there is usually a £25 fee per payment. For this reason, CHAPS is primarily used for high-value transactions.
Implementing efficient faster payments for a small business can be a surprisingly simple process. These can enable businesses to sell just about anywhere and get paid quickly.
With PayPal, customers can pay using different payment methods and businesses can integrate their payment solution with their ecommerce, accounting, marketing and operations tools to create efficiencies and automate tasks.
In addition, it offers payment fraud protection tools that help make payments secure and help SMEs save time and money.
Faster ecommerce payments, integrated with an efficient payment solution, can save time and give businesses the cash flow needed to grow. Accept payments from multiple sources instantly and see your customers and bottom line thrive.