Although you may have heard the expression “to make a Bacs payment”, Bacs is actually the central payment system used to process several different types of electronic payment. The vast majority of Bacs payments are Direct Debits or Direct Credits (used by companies to pay individuals salaries, pensions, state benefits and tax credits).

Until the introduction of Faster Payments, Bacs was also used to process one-off internet and phone payments and standing order payments. However, as Faster Payments enables these payments to be processed almost instantaneously, 24 hours a day, seven days a week it is now the default system and is used for the vast majority of these types of payment.

What would I use this for?

  • All your Direct Debits and regular payments from businesses into your account such as wages, salaries, pensions, state benefits and tax credits will automatically be processed via Bacs.
  • Nowadays it is much less likely that any other electronic or automated payments you make (such any one-off phone and internet payments or standing orders) will be processed through Bacs. This is because it takes three working days for these payments to be processed via Bacs whereas Faster Payments, which was launched in 2007, is an almost instantaneous system which is available seven days a week and 24 hours a day.
  • Not all accounts (for instance some saving accounts or deposit accounts) enable you to send Faster Payments. You can check to see whether the sort code of the account you have is set up for Faster Payments on the Payments Council’s sortcode checker.

How do I use it?

  • Your Direct Debits will be automatically directed through Bacs so you don’t need to do anything.
  • If you want to transfer money out of an account (such as a savings account) which doesn’t allow Faster Payments using phone or internet banking it will automatically be processed via Bacs. This means that if you make the payment on a Monday it will arrive in the destination account on the Wednesday. If timescales are important for a payment you should check with your bank before making the payment.

Security

  • The Bacs central system itself is extremely secure, and there are lots of layers of security built into the processes that banks and businesses use to process payments through Bacs.
  • From a customer’s perspective – the security you see will depend on the type of payment you make. For instance only approved businesses are allowed to collect Direct Debits and in the event that anything goes wrong as a customer you get excellent protection should anything go wrong with your Direct Debit thanks to the Direct Debit Guarantee. Full details can be found on the Bacs website.
  • Regardless of the type of electronic payment you enjoy the same level of protection. This means you would expect an immediate refund if you are an innocent victim of fraud. Your claim needs to be made within the 13 months of fraudulent transaction leaving your account. Payments require your authorisation in advance and your bank must tell you what information the payment will be processed on (e.g. account number and sort code). If you give the correct information and your payment goes astray your bank must make immediate efforts to trace the transaction and notify you of the outcome. In this case the transaction will be refunded. If you give incorrect information and the payment goes astray your bank must make ‘reasonable efforts’ to trace the transaction but may charge for doing so. However, they have no liability for getting the funds back.
  • When you set up an electronic or automated payment from your account it is vital that you give the correct sort code and account number and name of the person/business you want to pay. If you give incorrect details your money may end up in someone else’s account and it may be difficult to get it back.

Useful information

  • If you want to make a payment that is time-critical you should check with your bank which options are available from your account. If you want to make an almost instantaneous electronic or automated payment in the UK you should make sure your payment is processed as a Faster Payment or, if this generally free system, isn’t available – via CHAPS – for which you will generally be charged a fee.
  • Useful website: www.bacs.co.uk

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