The Payments Council was an organisation of financial institutions in the United Kingdom, which set strategy for UK payment mechanisms from 2007 until 2015.
65-427: The Faster Payments Service ( FPS ) is a United Kingdom banking initiative to reduce payment times between different banks' customer accounts to typically a few seconds, from the three working days that transfers usually take using the long-established BACS system. CHAPS , which was introduced in 1984, provides a limited faster-than-BACS service (by close of business that day) for "high value" transactions, while FPS
130-412: A bank account is considered indispensable by most businesses and individuals. Non-banks that provide payment services such as remittance companies are normally not considered as an adequate substitute for a bank account. Banks issue new money when they make loans. In contemporary banking systems, regulators set a minimum level of reserve funds that banks must hold against the deposit liabilities created by
195-530: A joint venture company set up by Voca and LINK who have since merged to form Vocalink . In December 2005 the Payment Systems Task Force accepted an APACS recommendation for a still more ambitious target on payment times to ensure access to funds within a couple of hours of any payment being made, and allowing payments to be sent 24 hours a day, 7 days a week, to be available by November 2007. This stage also marked formal dissolution of
260-425: A large number of small to medium-sized institutions in its banking system. As of November 2009, China's top four banks have in excess of 67,000 branches ( ICBC :18000+, BOC :12000+, CCB :13000+, ABC :24000+) with an additional 140 smaller banks with an undetermined number of branches. Japan had 129 banks and 12,000 branches. In 2004, Germany, France, and Italy each had more than 30,000 branches – more than double
325-575: A new body responsible for the integrity and efficiency of co-operative payment systems in the UK. This was set up as the Payments Council in 2007. By the time of a planned two-year OFT review in 2009, the Payments Council had taken over some activities from the Association for Payment Clearing Services (APACS), which no longer exists. One of the tasks of the Payments Council was to implement
390-562: A period of four years to resolve outstanding competition problems in advance of any legislation – essentially self-regulation . In March 2004 the OFT announced the formation of a joint government-industry body, the Payments Systems Task Force, under its chairmanship. In May 2005 the task force announced that an agreement had been reached to reduce clearing times for phone, Internet and standing order payments. This committed
455-416: A safe and convenient form of money backed by the goldsmith's promise to pay, allowing goldsmiths to advance loans with little risk of default . Thus the goldsmiths of London became the forerunners of banking by creating new money based on credit. The Bank of England originated the permanent issue of banknotes in 1695. The Royal Bank of Scotland established the first overdraft facility in 1728. By
520-399: A variety of different ways including interest, transaction fees and financial advice. Traditionally, the most significant method is via charging interest on the capital it lends out to customers. The bank profits from the difference between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. This difference
585-446: Is a bank regulation , which sets a framework within which a bank or depository institution must manage its balance sheet . The categorisation of assets and capital is highly standardised so that it can be risk weighted . After the financial crisis of 2007–2008 , regulators force banks to issue Contingent convertible bonds (CoCos). These are hybrid capital securities that absorb losses in accordance with their contractual terms when
650-400: Is a Bills of Exchange Act that codifies the law in relation to negotiable instruments , including cheques, and this Act contains a statutory definition of the term banker : banker includes a body of persons, whether incorporated or not, who carry on the business of banking' (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that
715-403: Is a list of the largest deals in history in terms of value with participation from at least one bank: Currently, commercial banks are regulated in most jurisdictions by government entities and require a special bank license to operate. Usually, the definition of the business of banking for the purposes of regulation is extended to include acceptance of deposits, even if they are not repayable to
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#1732781031806780-434: Is focused on the much larger number of smaller payments, subject to limits set by the individual banks, with some allowing Faster Payments of up to £1million. Transfer time, while expected to be short, is not guaranteed, nor is it guaranteed that the receiving institution will immediately credit the payee's account. Nine banks and one building society , accounting for about 95% of payments traffic, initially committed to using
845-431: Is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclical and dependent on the needs and strengths of loan customers and the stage of the economic cycle . Fees and financial advice constitute a more stable revenue stream and banks have therefore placed more emphasis on these revenue lines to smooth their financial performance. In
910-626: The Basel Accords . Banking in its modern sense evolved in the fourteenth century in the prosperous cities of Renaissance Italy but, in many ways, functioned as a continuation of ideas and concepts of credit and lending that had their roots in the ancient world . In the history of banking , a number of banking dynasties – notably, the Medicis , the Pazzi , the Fuggers ,
975-632: The Faster Payments Service , taking clearing times in the UK from among the slowest to among the fastest in the world. Criticisms made in 2009 included delays and shortcomings in delivery, and inability to ensure that Faster Payments members promptly passed on benefits to their customers. In 2010, it sponsored the Sort Code Validation Accreditation Scheme (SCVAS), which aimed to improve the distribution and validation of bank reference data within
1040-742: The Federal Deposit Insurance Corporation (FDIC) as a regulator. However, for soundness examinations (i.e., whether a bank is operating in a sound manner), the Federal Reserve is the primary federal regulator for Fed-member state banks; the Office of the Comptroller of the Currency (OCC) is the primary federal regulator for national banks. State non-member banks are examined by the state agencies as well as
1105-651: The Great Depression , the U.S. Savings and Loan crisis in the 1980s and early 1990s, the Japanese banking crisis during the 1990s, and the sub-prime mortgage crisis in the 2000s. The 2023 global banking crisis is the latest of these crises: In March 2023, liquidity shortages and bank insolvencies led to three bank failures in the United States , and within two weeks, several of the world's largest banks failed or were shut down by regulators Assets of
1170-528: The Medici Bank , in 1397. The Republic of Genoa founded the earliest-known state deposit bank, and Banco di San Giorgio (Bank of St. George), in 1407 at Genoa , Italy. Fractional reserve banking and the issue of banknotes emerged in the 17th and 18th centuries. Merchants started to store their gold with the goldsmiths of London , who possessed private vaults , and who charged a fee for that service. In exchange for each deposit of precious metal,
1235-569: The Renaissance by Florentine bankers, who used to make their transactions atop desks covered by green tablecloths. The definition of a bank varies from country to country. See the relevant country pages for more information. Under English common law , a banker is defined as a person who carries on the business of banking by conducting current accounts for their customers, paying cheques drawn on them and also collecting cheques for their customers. In most common law jurisdictions there
1300-594: The Welsers , the Berenbergs , and the Rothschilds – have played a central role over many centuries. The oldest existing retail bank is Banca Monte dei Paschi di Siena (founded in 1472), while the oldest existing merchant bank is Berenberg Bank (founded in 1590). Banking as an archaic activity (or quasi-banking ) is thought to have begun as early as the end of the 4th millennium BCE, to
1365-729: The cheque guarantee card scheme would end in June 2011. The Payments Council advised a Treasury Select Committee inquiry in February 2010 that cheques were in "terminal decline", down to 3.5 million per day in 2009 from a peak of 11 million in 1990. After lobbying from the charity sector , the Council reaffirmed in October 2010 that the 2018 closure is conditional on adequate alternatives being in place by 2016. However, in April 2011
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#17327810318061430-454: The economy of a country, most jurisdictions exercise a high degree of regulation over banks. Most countries have institutionalized a system known as fractional-reserve banking , under which banks hold liquid assets equal to only a portion of their current liabilities. In addition to other regulations intended to ensure liquidity , banks are generally subject to minimum capital requirements based on an international set of capital standards,
1495-481: The 15,000 branches in the United Kingdom. Between 1985 and 2018 banks engaged in around 28,798 mergers or acquisitions, either as the acquirer or the target company. The overall known value of these deals cumulates to around 5,169 bil. USD. In terms of value, there have been two major waves (1999 and 2007) which both peaked at around 460 bil. USD followed by a steep decline (−82% from 2007 until 2018). Here
1560-404: The 19th century, we find in ordinary cases of deposits, of money with banking corporations, or bankers, the transaction amounts to a mere loan, or mutuum , and the bank is to restore, not the same money, but an equivalent sum, whenever it is demanded and money, when paid into a bank, ceases altogether to be the money of the principal (see Parker v. Marchant, 1 Phillips 360); it is then the money of
1625-419: The 3rd millennia BCE. The present era of banking can be traced to medieval and early Renaissance Italy, to the rich cities in the centre and north like Florence , Lucca , Siena , Venice and Genoa . The Bardi and Peruzzi families dominated banking in 14th-century Florence, establishing branches in many other parts of Europe. Giovanni di Bicci de' Medici set up one of the most famous Italian banks,
1690-1343: The CHAPS sterling high-value same-day payment system.) Towards the end of 2011, Faster Payments Scheme Limited (a member-based organisation) was set up to separate out the day-to-day operations and management of the service from CHAPS. VocaLink continues to provide and operate the infrastructure for the service. The original founding members of the new service were Abbey (now Santander UK ), Alliance & Leicester (now part of Santander UK), Bank of Scotland (including Halifax ), Barclays , Citi , Clydesdale Bank (including Yorkshire Bank , both now Virgin Money ), The Co-operative Bank , HSBC , Lloyds TSB (now Lloyds Bank and TSB ), Nationwide Building Society , Northern Bank (now Danske Bank ), Northern Rock (now part of Virgin Money) and The Royal Bank of Scotland (including NatWest and Ulster Bank ). Abbey and Alliance & Leicester merged their membership under Santander UK in February 2011; Bank of Scotland merged their membership into Lloyds Banking Group in September 2011 and Northern Rock resigned from membership in October 2011. The remaining ten members became
1755-529: The FDIC. National banks have one primary regulator – the OCC. Each regulatory agency has its own set of rules and regulations to which banks and thrifts must adhere. The Federal Financial Institutions Examination Council (FFIEC) was established in 1979 as a formal inter-agency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions. Although
1820-584: The FFIEC has resulted in a greater degree of regulatory consistency between the agencies, the rules and regulations are constantly changing. Payments Council In his 2003 Pre-Budget Report , then- Chancellor Gordon Brown announced that the Office of Fair Trading (OFT) would lead a new Payments Systems Task Force. The OFT recommended to the Chancellor in 2006 that the Task Force should establish
1885-456: The Payments Council consisted of: Of the fifteen directors on the Board, eleven were industry-appointed directors who represented a cross section of Payments Council membership, and four independent directors. Each independent director held one voting seat and was appointed for a period of three years, which could be extended once for a further three years. The independent directors together had
1950-481: The Select Committee reopened its inquiry into the 2018 target date, after receiving a large volume of correspondence from small businesses, voluntary organisations and older people who were still using cheques. The inquiry will also consider the structure and performance of the Payments Council, including whether it is sufficiently accountable for the impact of its decisions on consumers. The chairman of
2015-589: The Task Force and reformation as a permanent body, the Payments Industry Association (later Payments Council), responsible for governance of all payments systems, including Faster Payments. APACS was responsible for the development and delivery of Faster Payments, but after May 2008 transferred day-to-day operations and management of the service to the CHAPS Clearing Company (a member-based organisation responsible for
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2080-465: The UK payments industry. This was to be achieved via commercial providers offering products and services to verify sort codes used in electronic payment processing. The Payments Council clashed with the Government in 2011 over plans to abolish cheques . This led to a government consultation on separating the regulatory function from the industry body. The Payments Council went on to implement
2145-538: The UK, for example, the Financial Services Authority licenses banks, and some commercial banks (such as the Bank of Scotland ) issue their own banknotes in addition to those issued by the Bank of England , the UK government's central bank. Banking law is based on a contractual analysis of the relationship between the bank (defined above) and the customer – defined as any entity for which
2210-507: The approach of individual member banks to its adoption (see Implementation ). A general online sort code checker was made available through APACS shortly ahead of launch, which shows whether a specific sort code is able to receive Faster Payments. On 1 May 2018 the Bank of England announced that the New Payment System Operator (NPSO), which had been rebranded as Pay.UK in 2017, had taken over responsibility for
2275-639: The bank agrees to conduct an account. The law implies rights and obligations into this relationship as follows: These implied contractual terms may be modified by express agreement between the customer and the bank. The statutes and regulations in force within a particular jurisdiction may also modify the above terms or create new rights, obligations, or limitations relevant to the bank-customer relationship. Some types of financial institutions, such as building societies and credit unions , may be partly or wholly exempt from bank license requirements, and therefore regulated under separate rules. The requirements for
2340-411: The bank will not repay it), and interest rate risk (the possibility that the bank will become unprofitable, if rising interest rates force it to pay relatively more on its deposits than it receives on its loans). Banking crises have developed many times throughout history when one or more risks have emerged for the banking sector as a whole. Prominent examples include the bank run that occurred during
2405-667: The bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as Automated Clearing House (ACH), Wire transfers or telegraphic transfer , EFTPOS , and automated teller machines (ATMs). Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits , and by issuing debt securities such as banknotes and bonds . Banks lend money by making advances to customers on current accounts, by making installment loans , and by investing in marketable debt securities and other forms of money lending. Banks provide different payment services, and
2470-456: The banker, who is bound to return an equivalent, by paying a similar sum to that deposited with him, when he is asked for it. The goldsmith paid interest on deposits. Since the promissory notes were payable on demand, and the advances (loans) to the goldsmith's customers were repayable over a longer time-period, this was an early form of fractional reserve banking . The promissory notes developed into an assignable instrument which could circulate as
2535-648: The banking industry was consulted by the government on further steps and progress in payment services monitored by the Competition Commission and the Office of Fair Trading (OFT). By May 2003, while the OFT was able to report modest improvements, such as changes to BACS and the governance of APACS, some competition concerns remained and, in December 2003, the Treasury announced the OFT would take on an enhanced role in relation to payment systems, for
2600-717: The beginning of the 19th century Lubbock's Bank had established a bankers' clearing house in London to allow multiple banks to clear transactions. The Rothschilds pioneered international finance on a large scale, financing the purchase of shares in the Suez canal for the British government in 1875. The word bank was taken into Middle English from Middle French banque , from Old Italian banco , meaning "table", from Old High German banc, bank "bench, counter". Benches were used as makeshift desks or exchange counters during
2665-515: The business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purpose of regulating and supervising banks rather than regulating the actual business of banking. However, in many cases, the statutory definition closely mirrors the common law one. Examples of statutory definitions: Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking ,
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2730-533: The capital of the issuing bank falls below a certain level. Then debt is reduced and bank capitalisation gets a boost. Owing to their capacity to absorb losses, CoCos have the potential to satisfy regulatory capital requirement. The economic functions of banks include: Banks are susceptible to many forms of risk which have triggered occasional systemic crises. These include liquidity risk (where many depositors may request withdrawals in excess of available funds), credit risk (the chance that those who owe money to
2795-483: The cheque has lost its primacy in most banking systems as a payment instrument. This has led legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques . Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers in
2860-423: The cross-selling of complementary products. Banks face a number of risks in order to conduct their business, and how well these risks are managed and understood is a key driver behind profitability, and how much capital a bank is required to hold. Bank capital consists principally of equity , retained earnings and subordinated debt . Some of the main risks faced by banks include: The capital requirement
2925-408: The customer's order – although money lending, by itself, is generally not included in the definition. Unlike most other regulated industries, the regulator is typically also a participant in the market, being either publicly or privately governed central bank . Central banks also typically have a monopoly on the business of issuing banknotes . However, in some countries, this is not the case. In
2990-428: The first non-bank payment service provider to be a directly connected settling participant, after being the first of its kind to gain access to Bank of England 's Real-Time Gross Settlement (RTGS) system. In February 2019, Equals Money joined Faster Payments as the fourth non-bank to be directly connected. There are now 40 bank and non-bank members. Following the initial launch of the central infrastructure, work
3055-589: The funding of these loans, in order to ensure that the banks can meet demands for payment of such deposits. These reserves can be acquired through the acceptance of new deposits, sale of other assets, or borrowing from other banks including the central bank. Activities undertaken by banks include personal banking , corporate banking , investment banking , private banking , transaction banking , insurance , consumer finance , trade finance and other related. Banks offer many different channels to access their banking and other services: A bank can generate revenue in
3120-407: The goldsmiths issued receipts certifying the quantity and purity of the metal they held as a bailee ; these receipts could not be assigned, only the original depositor could collect the stored goods. Gradually the goldsmiths began to lend money out on behalf of the depositor , and promissory notes , which evolved into banknotes, were issued for money deposited as a loan to the goldsmith. Thus, by
3185-597: The initial shareholders of Faster Payments Scheme Limited in November 2011. In December 2016, Metro Bank joined the system, the first High Street bank to do so since its inception. Later, in January 2017, Starling Bank joined the service as a direct partner, the first digital-only bank in the system's history. In February 2018, Ebury became the first to join as a directly connected non settling participant, DCNSp. In April 2018, TransferWise joined Faster Payments as
3250-432: The inquiry, Andrew Tyrie MP, stated, "The Payments Council has not thought through its arguments carefully enough and its first piece of work on the cost–benefit of abolishing cheques was clearly defective." The Payments Council welcomed the opportunity to reassure the public that cheques would not be abolished before acceptable alternatives were available. On 12 July 2011 the Payments Council announced it had cancelled
3315-442: The issue of a bank license vary between jurisdictions but typically include: Banks' activities can be divided into: Most banks are profit-making, private enterprises. However, some are owned by the government, or are non-profit organisations . The United States banking industry is one of the most heavily regulated and guarded in the world, with multiple specialised and focused regulators. All banks with FDIC-insured deposits have
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#17327810318063380-409: The largest 1,000 banks in the world grew by 6.8% in the 2008–2009 financial year to a record US$ 96.4 trillion while profits declined by 85% to US$ 115 billion. Growth in assets in adverse market conditions was largely a result of recapitalisation. EU banks held the largest share of the total, 56% in 2008–2009, down from 61% in the previous year. Asian banks' share increased from 12% to 14% during
3445-450: The legal basis for bank transactions such as cheques does not depend on how the bank is structured or regulated. The business of banking is in many common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business . When looking at these definitions it is important to keep in mind that they are defining
3510-763: The mobile payment system Paym and the Current Account Switch Service (CASS). In April 2015, the regulatory powers of the Payments Council were transferred to a new body, the Payment Systems Regulator , set up by the Financial Conduct Authority in accordance with section 40 of the Financial Services (Banking Reform) Act 2013. On 29 June 2015, the Payments Council was then relaunched as the trade association Payments UK . The board of
3575-878: The operation of the Bacs and Faster Payments systems and Faster Payments announced that it had become a subsidiary company of Pay.UK. In November 1998 the UK Treasury commissioned the Cruickshank Report, a review of competition within the UK banking sector, which was reported in March 2000. Among its recommendations was primary legislation to establish an independent payment systems commission (PayCom) in place of existing, privately controlled interbank arrangements. The following day, Chancellor Gordon Brown announced that legislation would be introduced, if necessary, to open payment systems to increased competition. Initially
3640-455: The past 20 years, American banks have taken many measures to ensure that they remain profitable while responding to increasingly changing market conditions. This helps in making a profit and facilitates economic development as a whole. Recently, as banks have been faced with pressure from fintechs, new and additional business models have been suggested such as freemium, monetisation of data, white-labeling of banking and payment applications, or
3705-551: The payment is sent, and the type of account their customer is sending from." On 1 January 2012, Regulation 70 in the Payment Services Regulations 2009 went into effect, requiring that all standing orders be settled within a day of submission. This shifted about five million payments from the BACS system to FPS, putting monthly volumes above 20 million. FPS handled 967.6 million transactions in 2013, up 19% from
3770-441: The payments services industry to develop a system able to clear automated payments in no more than half a day – the so-called ELLE model – resulting in payment being received the same day if made sufficiently early. Implementation groups were given six months to bring forward detailed proposals. In October 2005 the contract to provide the central infrastructure for this new service was awarded by APACS to Immediate Payments Limited,
3835-491: The power of veto and produced an annual report each year. The Payments Council was a voluntary membership organisation, with a mix of full and associate members. On behalf of the UK payments industry as a whole, the Payments Council operated contracts with service providers such as BACS , CHAPS , Faster Payments , Cheque and Credit Clearing Company Limited and the LINK ATM Scheme. The National Payments Plan
3900-423: The prior year. The total value of transactions in 2013 was £771.4 billion, up 25% over 2012. Banking A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans . Lending activities can be directly performed by the bank or indirectly through capital markets . Whereas banks play an important role in financial stability and
3965-510: The service; as of May 2018 there were 21 direct participants. For smaller organisations such as building societies and savings institutions, the service is available through agency arrangements with a direct participant. Initially, there were few announcements regarding charges for Faster Payments; it had been expected to be around £1–£5 for immediate payments by business users. No retail bank currently charges personal customers for this service (with non-guaranteed transfer time), nor, as of 2018,
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#17327810318064030-462: The year, while the share of US banks increased from 11% to 13%. Fee revenue generated by global investment in banking totalled US$ 66.3 billion in 2009, up 12% on the previous year. The United States has the most banks in the world in terms of institutions (5,330 as of 2015) and possibly branches (81,607 as of 2015). This is an indicator of the geography and regulatory structure of the US, resulting in
4095-459: Was an annual document in which the Payments Council set out its strategic vision for the future development of payment services in the UK. The first national payments plan was published in May 2008 and updates were published on an annual basis. The first major move of the Payments Council, in 2009, was to agree to a target of 2018 for the closure of cheque clearing in the UK. It also announced that
4160-558: Was planned to provide a direct corporate access channel, and the first such payment was made in July 2009. This will ultimately enable businesses to submit large numbers of payments directly into the Faster Payments Service. From 6 September 2010, the value limit for all payment types was raised to £100,000. The limit is now £1 million. However, "organisations offering the service can set their own limits, depending on how
4225-400: Was there any sign that this would change. FPS was officially launched on 27 May 2008 (though testing during the previous week allowed users to process very small-value (1p) transactions as "faster payments") for non-scheduled, "immediate" payments (about 5% of traffic) only, with access for future-dated payments and standing orders from 6 June. In practice, the service was severely limited by
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