What are BACS Payments?
BACS (Bankers’ Automated Clearing Services) is an electronic system which facilitates the transfer of funds and payments from one bank account to another, which can be done either through direct debit or BACS direct credit. Typically, BACS payments are completed instantly (when both banks are part of the faster payment service), but they can take up to three working days for the funds to clear and become available to the payee. BACS is not operated by any single entity and there are lots of companies and BACS payment solutions out there.
Making a BACS Payment
Payments via BACS can be made through either i) direct debit, or ii) BACS Direct Credit. Direct debit is the most commonly used method of making BACS payments, as a customer pre-authorises the payment to be made from their bank account on a pre-determined date. It requires very little to set up and is easy for both the sender and the receiver. This is often why you’ll find businesses that accept direct debits offering to discount your bill if you make use of them.
BACS payments can also be made through their ‘Direct Credit’ system where banks allow you to credit an account directly, so long as you have information such as the payee’s name, bank account number, and sort code. The Direct Credit system is most commonly used by businesses who are paying wages or other fixed, regular payments.
Do BACS Payments Cost Anything?
In short, yes, but they are so much cheaper than any other alternative method of making payments and transferring money. BACS payments are some of the cheapest ways to collect money and the cost is generally only a few pence per payment; if that.
It gets a little more complicated when it comes to collecting Direct Debit payments, which require the use of a BACS-approved software (this can be quite expensive) or use a pre-existing bureau to collect the Direct Debit for you. The typical cost of a BACS Direct Debit is as follows –
BACS Approved Bureaus: Initial setup fees typically cost anything from £500 up to £1500 at the most basic-level and then, there are some businesses that also charge additional transaction fees, around £0.20-0.50. There are also additional costs such as monthly fees and new mandate fees.
Via Banks: Initial setup fees typically cost a few thousand at the most basic-level and the per-transaction fee is usually the same as through a bureau. Banks can also charge additional fees, but this depends on the bank in question.
Is BACS Safe?
Yes, it is! BACS is super safe and is known around the world for its secure delivery of funds. It has been the organisation responsible for UK electronic payments since the 1960s, so they must be doing something right. In its time, BACS has been used to facilitate over 100 billion transactions and has never misplaced, lost, or had a payment compromised. It uses a system protected by SSL encryption and only allows approved companies to collect Direct Debits, too.
BACS has been the UK’s trusted electronic payment processor since 1968 and has facilitated billions of payments in its time. It is a quick, convenient, secure, and relatively cheap way to process payments and send funds anywhere around the world.
How Long Does a BACS Payment Take?
Both Direct Debit and Direct Credit payments take around three working days to process. According to the BACS payment provider AccessPay the process is as follows: on the first day, the payments are submitted to BACS, on the second day they are processed by the banks, and on the third day, they are credited to the receiver’s account.
Some banks make use of the faster payments service, which transfers money within two hours. The main disadvantage of faster payments is that not all banks accept it, and of those that do, there are limits on the amount of money that can be sent. However, in cases where faster payments are not possible, a standard BACS payment can be sent.
Using approved companies such as AccessPay, BACS has established a secure network through which money can easily be transferred worldwide. Although there is some cost associated with BACS, it is more efficient and cost effective than other methods such as CHAPS.