Instant money transfers: What are they and how do they work?

Looking for a quick way to transfer money? An instant money transfer may enable seamless, real-time transactions, allowing people to send money in minutes instead of days.¹

This article includes tips, suggestions and general information. We recommend that you always do your own research and consider getting independent tax, financial and legal advice before making any important decision.

Whether splitting bills or giving money to family or friends, this article explores ways to transfer money immediately, from how it works to the potential pros and cons when doing so.

Fast transfers vs. traditional transfers

Traditional transfers generally refer to the conventional methods of moving money, such as bank transfers, direct debits, or cheques. They may involve a delay in processing as the institutions responsible for processing these payments typically wait until multiple such transactions are in their queue. In payments, this is known as ‘batch processing’.

Batch processing may take several hours or days to complete, depending on several factors, such as:

• Cut-off times: Banks and financial institutions often have specific cut-off times each day. Transfers initiated after a cut-off may be processed in the next batch, resulting in delays.
• Weekends and public holidays: Banks typically do not process transfers outside weekdays.
• Intermediary banks: Transferring funds between different financial institutions or across borders may result in additional processing time.
• Verification and fraud checks: Traditional transfers may involve manual verification processes and fraud, sanctions, and compliance checks.

Financial institutions in the UK must abide by the Payment Services Directive (PSD2). This law ensures that any payments made by mobile, internet, phone banking, and standing order must arrive by the end of the following business day. In addition, through the UK’s Faster Payment System, funds may be available almost immediately but may take up to two hours.¹

Fast transfer apps

Known for their convenience, speed, and ease of use, fast transfer apps allow individuals to send and receive money quickly. These apps and platforms may either be solely focused on peer-to-peer (P2P) payments or feature P2P as one of their offerings.

Such apps can help people link their bank accounts, credit cards, or other financial accounts, so they initiate transfers directly from their devices.

Keep in mind that different fast transfer apps may have varying features, security measures, fees, and transfer limits.

Potential pros and cons of fast transfers

What are the potential advantages and disadvantages of quick money transfers? Here’s what to know.

Possible benefits of fast transfers

The potential benefits of transferring money quickly include:

• Speed: Fast transfers generally allow for immediate access to funds.
• Convenience: People can usually start and finish fast transfers through digital platforms, eliminating the need for bank branch visits or paperwork.
• Flexibility: Real-time transfers may enable individuals to respond promptly to financial needs or time-sensitive transactions.

Possible downsides of fast transfers

Some of the potential drawbacks include:

• Potential fees: While some quick transfer services are free or low-cost, others may charge fees.
• Security: For some, quick transfers may raise concerns about fraud or unauthorised transactions.
• Lack of cancellation: Fast transfers may not allow people to reverse or cancel a transaction once it has been initiated.

Losses due to unauthorised transactions on cards, cheques, and remote banking amounted to £340.7 million in the first half of 2023.² While fast transfers may enable quick and seamless transactions, people should be aware of potential scam tactics to exploit them, such as:

• Fake invoice fraud: Scammers may send fake invoices, pose as legitimate suppliers or service providers, or adopt urgency to pressure individuals to send money.
• Authorised push payment (APP) fraud: Scammers may attempt to manipulate people into authorising fast transfers by posing as friends, colleagues, relatives, or trusted acquaintances.
• Account takeover (ATO) fraud: This can involve hackers gaining unauthorised access to an individual’s accounts — by phishing or other cyber-attacks — and initiating quick transfers from the compromised accounts.