Costs and Benefits of Building Faster Payment Systems: The UK Experience

Claire Greene, Marc Rysman, Scott Schuh and Oz Shy
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Scott Schuh: West Virginia University

No 18-07, Working Papers from Department of Economics, West Virginia University

Abstract: A number of countries have implemented faster payment services that allow consumers and businesses to rapidly transfer money between bank accounts. These services compete with slower, existing payment services. In 2008, the United Kingdom implemented its Faster Payments Service (FPS) at a cost of less than ₤200 million (.014 percent of U.K. GDP, or $307 million) spread over seven years, plus investment costs borne by each participating bank to connect to the FPS. This paper examines the economic cost-benefit analysis underlying the U.K. FPS investment decision and describes the subsequent diffusion and use of FPS through 2014.

Keywords: fast payments systems; cost-benefit analysis; account-to-account (A2A) transfers; person-to-person (P2P) payments; faster payments (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2018
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