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How does the BACS payment system work?

The most popular method for businesses to send and receive automated payments is Bacs. Bacs stands for the Bankers' Automated Clearing System, which refers to the network of major banks and building societies that take part in the Bacs payment scheme. Having launched in 1968 and later becoming a subsidiary of PayUK, Bacs is still going strong, with “Bacs payments” becoming the accepted vernacular for electronic payments.

What is a Bacs payment?

Bacs payments are essentially bank-to-bank transfers. There are two main types of Bacs payments: Direct Debits and Direct Credits. The difference being that a Direct Debit takes or debits money from another bank account, while a Direct Credit pays or deposits money into another account. Bacs payments are a cost-effective method for paying everything from wages to state benefits and pensions, to name but a few.

How does the Bacs payment system work?

A Direct Debit mandate authorises a payment from one account to another using a verified provider. This is processed by the provider debiting the funds, who sets up a Direct Debit instruction on the payee’s account. Once this is live, the payment processor can make requests for payments. Advance notice of the amount and frequency of the payments must be given to the payee, who is protected under the Direct Debit guarantee.

How long does a bacs payment take?

Bacs payments are still the industry standard for most major business transactions, despite the fact that they take three business days to clear. On day one, a payment file is submitted to the Bacs payment system before an official cut-off time. On day two, the bank processes this file, and on day three, the Bacs payment is credited. Those funds should arrive in the recipient’s bank account by 7 am on the third day of the process.

Why choose Bacs payment services from Interbacs?

Interbacs offers superior Direct Debit solutions, thanks to our wealth of experience and expertise as one of the first Bacs Approved Bureau in the UK. Our Direct Debit solutions can boost your cash flow, give you a competitive edge, and encourage customer loyalty thanks to hassle-free payment plans. Our paperless solutions can also play their part in helping your company to reduce its carbon footprint.

  • Effortless sign-up for customers.
  • Scheduled recurring payment dates.
  • Maximises processing performance.
  • Less administrative work for your business.

The beauty of our Bacs approved Bureau and Facilities Management services are that we can significantly reduce the burden of mundane administrative tasks. Our market-leading Direct Credit and Direct Debit solutions are designed to free up your time to concentrate on your core specialities, delivering a genuine return on investment and facilitating the growth of your business by streamlining your transactions.

Find out more

If you want to learn more about how Interbacs can help your business expand, call us at 0161 667 0758. Alternatively, email us at