Bacs Payments (2024)

FAQs

What is a BACS payment? ›

What is a Bacs payment? Bacs stands for Bankers' automated clearing system and it is the electronic way of transferring money from one bank to another within the UK. There are two different types of automated payments, Direct Debit and Direct Credit.

ACH is used in the United States, while BACS is specific to the United Kingdom. Their processing times and transaction fees may also vary.

What is a Bacs payment? A Bacs payment is a bank-to-bank transfer between banks in the UK.

Swift payments vs BACS

BACS are ideal for everyday transfers such as utility bills, and are usually fee-free. BACS transfers can be made only within the UK and aren't instant, taking up to three working days. With Swift you have the security of tracked international payments, in any currency.

There are two options to process Bacs direct credit payments, or “Bacs out”. You either run it through your bank, or you go to a Bacs Approved Bureau to process your Bacs payments. Either way, in order to make a Bacs payment as a business you'd have to sign up with Bacs in one way or the other.

If you pay the household bills or use a subscription service, you will have made a payment via BACS before. This is where you give permission for a company to automatically take payments from your account on an agreed schedule, such as each month. Examples include mortgage payments, utility bills or council tax.

The equivalent system to the UK's Bacs is the Automated Clearing House, or ACH. This network only works within the United States, so you won't be able to send payments to UK clients using ACH. It also only applies to banking rather than debit or credit card payments.

A Bacs transfer (or "Bacs Direct Credit" or "Direct Deposit") is a secure service which enables organisations to make payments direct into another bank or building society account. Using a Bacs transfer, your bank allows you to credit another account by using either your personal or business banking service.

Bacs allows you to schedule regular payments via its direct credit or direct debit payments options. This is the reason why the UK Government uses Bacs for pension and welfare payments, and why it is the most popular payment method for employers paying employees.

Is Bacs being phased out? ›

The New Payments Architecture (NPA) will be a new way of processing payments in the UK. It replaces the existing Faster Payments scheme and lays out the framework for a replacement to the Bacs scheme.

You can also use your BACS international payments facility for paying suppliers and covering costs such as an overseas office.

In the United Kingdom, the term "BACS Payment", "bank transfer" and "bank payment" are used, in Canada, "e-transfer" is used, while in several other European countries "giro transfer" is the common term.

Rather than going through an ACH system like BACS, which can take up to three days, a wire transfer is more direct. It is, theoretically, quicker too. You instruct your bank of the transfer you want to make, including the sum and the details of the recipient – whether domestic or international.

Rather than going through an ACH system like BACS, which can take up to three days, a wire transfer is more direct. It is, theoretically, quicker too. You instruct your bank of the transfer you want to make, including the sum and the details of the recipient – whether domestic or international.

How much does a Bacs payment cost? Bacs payments are one of the cheapest ways for businesses to transfer money between banks. You can expect to pay between 5 and 50p — plus any additional fees charged by your bank — per transaction.