A payment scheme is a set of rules and technical standards for making payments through specific payment instruments (e.g credit transfer, card payments, cheques, direct debit, etc). Payment schemes are operated by companies called Payment System Operators (PSOs). PSOs usually oversee and run payment systems – technical infrastructure that process transactions in line with the payment scheme rules.
SWIFT is an an example of an international payment scheme. Mastercard and Visa are card schemes. The UK has the following interbank payment schemes:
- Bacs: Payment scheme for regular bulk high volume credit transfers and direct debits. Bacs has 2 core schemes – a. Bacs Direct Credit and b. Direct Debit. Payment settles on multilateral net basis. Payments complete in 2 days. Payment limit is £20m for retail customers. Bacs is operated by Bacs Payment Schemes Limited.
- C&CCC: The Cheque and Credit Clearing Company (C&CCC) operate cheque and credit clearing system that clears paper based instruments like cheques, bankers’ drafts, postal orders, and travellers’.
- CHAPS – The UK’s high value, same day payment system. Usually used for wholesale, commercial and corporate payments. Used for time-critical payments and large retail purchases like houses. Operated by the Bank of England.
- LINK: payment scheme predominantly used by the UK’s ATM network for cash withdrawals and balance enquiries. Operated by Link Scheme Limited.
- Faster Payments: The UK’s low-value real-time payment system. Used for real time payment credits for online banking, mobile payments and standing orders. Operated by Faster Payments Scheme Limited.
- Paym: mobile payment service aimed at private individuals (P2P), settling small debts (IOUs) and customer to small business (C2B) payments. Users link their mobile phone number to their bank accounts which allows payments to be received using just the mobile number (no sort code or account number needed). Paym is a proxy for initiating payments over Faster Payments or LINK. Operated by Mobile Payment Service Company