What is a Bacs Payment

What is a Bacs Payment? A Simple Guide for Everyday Transactions

The term “Bacs” probably makes you think of payday. That’s because over 361 million payroll payments were made through the Bacs system in 2016 alone.

If you’ve ever checked your bank statement, you’ve likely seen Bacs listed as the method for receiving your monthly pay. You might be familiar with it from your personal banking experience.

But Bacs isn’t just for payroll. How else can you use Bacs for your business? How do you set up a Bacs scheme, and what other methods can it replace or improve?

This guide will explain everything you need to know about Bacs payments and how they can benefit you.

What Does Bacs Stand For and How Does It Work?

Bacs stands for Bankers’ Automated Clearing Services. It’s a UK network of banks and building societies that handle Bacs payments.

Bacs has been around since 1968. Remarkably, it has processed over 160 billion transactions since then. In 2018, took over its management. Furthermore, in 2022 alone, Bacs handled 6.7 billion payments, totaling £5.3 trillion.

A Bacs payment is a popular way to move money from one bank account to another in the UK. You might be familiar with it in two forms:

  • Direct Debit: This is when you let someone else take money from your account. For instance, you might set up Direct Debits for utility bills, internet charges, or council tax. Therefore, it’s a convenient way to manage regular payments.
  • Direct Credit: Also known as a ‘bank transfer,’ this is when someone else deposits money into your account. For example, this could be your salary, a refund, or a pension contribution. Consequently, it’s a reliable way to receive funds.

How to Make a Bacs Payment?

A Bacs transfer is basically a regular bank payment, but it’s not something you can do automatically. Even if you have a corporate banking system like NatWest’s Bankline or Barclays.Net, it doesn’t mean you can make Bacs payments. These systems usually offer CHAPS, next-day, and same-day payments, but not Bacs transfers.

To make a Bacs direct credit payment (also called “Bacs out”), you have two choices. You can either process it through your bank or use a Bacs Approved Bureau. In either case, as a business, you need to register with Bacs to make these payments. Let’s first understand what a Bacs Service User Number (SUN) is.

What is a Bacs Service User Number?

A Bacs Service User Number (SUN) is your key to processing Bacs payments. It’s a six-digit number given by your bank that identifies you in the Bacs payment system.

Once you have a SUN, you have two options. You can either set up Bacs payments directly through your bank or use third-party Bacs software.

Do I Need a Bacs User Number to Make a Bacs Payment?

Yes, to make a Bacs payment, you need to apply for a Bacs Service User Number (SUN). A Bacs Service User Number (SUN) isn’t automatically provided by your bank. While some banks do offer ways to make Bacs payments without a SUN, they usually charge much higher fees. If you want to save money with lower fees, you should apply for a SUN.

As a corporate customer, you typically have access to several types of payments:

  • Same-day payments
  • Next-day payments
  • Future-dated payments
  • High-value same-day payments through CHAPS

What are the Benefits of a BACS payment?

Using Bacs payments comes with many benefits for your business:

Safety and Security

When making payments, you want them to be safe and secure. Bacs is one of the most trusted payment methods in the UK, so you can be confident that your transactions are protected.

Ease of Scheduling

Running a business is hectic, and it’s easy to miss payment deadlines. With Bacs, you can schedule regular payments through direct debit and direct credit. This system makes managing payments easier and is why the UK Government uses Bacs for welfare and pension disbursements.

Quick Processing

Bacs isn’t as fast as CHAPS, which guarantees same-day payments if submitted by a cut-off time. However, Bacs still processes payments within two to three business days. No matter the situation, you can expect Bacs to complete your payments within this period.

What are the Limitations of using Bacs payments?

Bacs payments have their benefits, but there are some limitations too:

Clears Only on Business Days

Bacs payments clear within three days, but only on business days. Weekends don’t count. So, if you have a time-sensitive payment, remember to factor in the weekend. For example, if you need to pay someone by Monday, you should process the payment by Wednesday of the previous week, not Friday.

Strict Cut-Off Times

There are strict cut-off times for Bacs payments, and these times can vary depending on your bank. For instance, Santander requires you to make a payment by 7 PM on the first business day. This is to ensure it clears by the third business day.

UK Only

Bacs payments are limited to the UK. You can only use them for transactions between UK bank accounts, so they won’t work for international payments.

Is Bacs the Same as Bank Transfer?

Yes, in the UK, there are three main types: Bacs, CHAPS, and Faster Payments. All three are used for domestic payments within the UK. Unlike the others, Bacs can also handle direct debit payments. This can be a bit tricky because in some places, like Europe with SEPA, there’s just one kind of bank transfer. So, when you’re dealing with UK bank transfers, remember that Bacs has its unique role.

What are Typical Bacs Payment Charges?

A Bacs payment is the most cost-effective option when you need to make a lot of payments each month. If you’re making Bacs payments, it typically costs between 5 and 50p per payment based on common bank charges.

But keep in mind, there might be some extra fees. These can include:

  • Bacs File Charges: Fees for processing the payment files.
  • Charges on Rejected Files: If a Bacs file is rejected, you could pay up to £100.
  • File Re-input or Amendments: Making changes or re-entering files can cost up to £300.
  • File Reversal: Reversing a payment file can be quite expensive, up to £2,000.
  • Mandatory Training: You might need to pay for training on how to use Bacs.
  • Long-Term Contracts: Some services might lock you into long-term agreements.
  • Smart Card Fees: Costs for smart cards and their replacements.
  • Hardware and Software Requirements: You may need specific hardware or software, which could have its own costs.

How Long Does a Bacs Payment Take?

Bacs Direct Credit and Direct Debit payments follow a three-day cycle. Here’s how it works: on the first day, you submit your payment to Bacs. By the second day, banks process these payments. On the third day, the money leaves your account and goes into the recipient’s account.

If you need quicker transactions, the Faster Payments Service can complete payments in less than 2 hours.

What Banks Use BACS?

Most major UK banks support Bacs payments. According to, as of December 2023, 31 banks offer Bacs. Here’s a list of these banks:

  • Allied Irish Bank
  • Atom Bank
  • Bank of England
  • Bank of Scotland plc
  • Barclays Bank plc
  • Barclays Bank UK plc
  • Citibank NA
  • ClearBank
  • Clydesdale Bank plc
  • Coutts & Co
  • Goldman Sachs
  • HSBC Bank plc
  • HSBC UK Bank plc
  • LHV
  • Lloyds Bank plc
  • Metro Bank
  • Modulr
  • Monzo Bank Limited
  • Nationwide Building Society
  • NatWest
  • Northern Bank Limited (trading as Danske Bank)
  • PayrNet
  • Santander
  • Starling Bank
  • The Access Bank UK
  • The Bank of London
  • The Co-operative Bank
  • The Royal Bank of Scotland
  • TSB
  • Turkish Bank UK
  • Virgin Money

Final Thought

Now you know what is Bacs Payment. Bacs payments are a dependable way for UK businesses to handle transactions. If you run a brick-and-mortar store, you’ll need a card machine that works well for you. Whether you prefer portable, countertop, or mobile devices, we have card machines that can simplify your payment process.

Want to learn more about our payment solutions? Talk to our experts today! You can take a look at our blog to learn more about paymentsave technology.

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