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What are Bacs Payments? The Complete Guide

What are Bacs payments? What does Bacs stand for? Is it the same as a bank transfer? And how long does it take to clear? The answers you seek are below. 👇

Bacs Meaning: What is a Bacs Payment?

Bacs is an electronic system used to make bank-to-bank transfers in the UK.

There are two main types of Bacs payments:

  • Direct Debit - A party has been given permission to withdraw money from the bank account of another party (to settle broadband or utility bills, for example);
  • Direct Credit - A party deposits money into another party’s bank account (a salary payment, for example).

Despite the fact that Bacs payments are not instant (or same-day) payments, it’s still the most popular bank-to-bank transfer method used by UK businesses.

What does Bacs stand for?

Bacs previously stood for Bankers’ Automated Clearing Services. It’s now known as Bacs Payment Schemes Limited (Bacs); a subsidiary of Pay.UK.

It was founded in 1968 and is now the standard payment method in the UK, handling more than 130 billion transactions since its inception.

Is Bacs the same as a Bank Transfer?

Yes, Bacs is a type of bank transfer. In fact, there are three kinds of bank transfers in the UK: Bacs, CHAPS, and Faster Payments.

However, only a Bacs payment can be used for a Direct Debit.

How long does a Bacs Payment take?

From start to finish, a Bacs transfer time usually takes three days.

Although it’s an electronic system, it gets the weekend off, so payments can only be sent and received on business days (Monday to Friday).

Here’s how the Bacs three-day cycle works:

  • Day One: A payment file is submitted to the Bacs system. These files can only be transmitted between 07:00 and 22:30.
  • Day Two: The file is delivered to the recipient bank for processing.
  • Day Three: Payment is settled. In the case of a Direct Debit, your account is debited the amount owed. In the case of a Direct Credit, your account is credited the amount owed.

Can Bacs Payments go at any time of day?

For the majority of banks, Bacs payments will arrive in your account between 01:00 and 07:00.

If you haven’t received a Bacs payment by 07:00, it’s likely that you’ll need to wait until the following working day.

How to make a Bacs Payment

To make a Bacs payment, you’ll need the name of the payee, the name of their bank, their bank account number and their sort code.

Do I need to be a Bacs Bureau to make Bacs Payments?

A Bacs bureau directly submits payment instructions to Bacs on behalf of its clients.

Many businesses use Bacs bureaus to delegate the collection of Direct Debits and the day-to-day management of payments.

However, you don’t need to be a Bacs bureau to make Bacs payments. So long as your bank provides the service, you can make Bacs payments from your bank account.

What are the typical Bacs Payment charges?

Bacs payments are one of the cheapest ways to send payments in the UK. It usually only costs a few pennies, depending on the volume of payments and the bank.

It doesn’t cost anything to receive a Bacs payment.

What is the difference between Bacs and Faster Payments?

Like Bacs, Faster Payments is an electronic payment system. It’s used to send payments in near real-time, with the money usually arriving in seconds. The payment is almost immediately visible in the recipient’s account moments after sending. Over 85% of phone and online payments are processed via Faster Payments.

Unlike Bacs, the Faster Payments system runs 24/7, 365 days a year, including public holidays. Some banks, however, do have a cut off time for Faster Payments, meaning anything sent after that time will only go through the following day.

What are the advantages of Faster Payments?

  • It’s fast! - Recipients will usually receive their money straight away — although it can sometimes take up to 2 hours. Still, much quicker than three days!
  • It’s (almost) everywhere - Faster Payments is offered by all major UK banks and many financial institutions. Most transfers from your Revolut account will arrive within seconds, although this can vary depending on the beneficiary's bank account.

What are the disadvantages of Faster Payments?

  • It’s not always available - Certain types of accounts, such as savings accounts, are not able to use the Faster Payments scheme.
  • Sometimes, it’s too fast - Once sent, the payment can’t be cancelled.

Bacs vs Faster Payments: At-a-glance

Bacs Faster Payments
What is it used for? Bacs payments are used for UK payments to and from bank accounts. This includes Direct Debits and salaries. Faster Payments are typically used by consumers who need to transfer small amounts of money quickly.
How much does it cost? Very low cost — often free. More expensive than Bacs, but still low cost. However, many banks waive the associated fee.
How long does it take to arrive? 3 working days. Within seconds, but can take up to 2 hours.*

* All financial institutions in the UK must abide by the Payment Services Directive (PSD), which states that any payments made by mobile, internet or phone banking (including standing orders) must arrive by the end of the following business day at the latest.

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