How Long Does a Bacs Payment take to Clear?

If you’re familiar with the banking and payments industry you’ll have heard of, and probably used, Bacs to make a payment. By the summer of 2021, total Bacs payments hit 150 billion, showcasing how popular and useful it is to the industry. But, how long does a Bacs payment take to clear? Continue reading our helpful guide to discover everything there is to know about Bacs.

What is Bacs?

Bacs stands for Bankers Automated Clearing System and is an electronic system to make bank transfers directly from one account to another. They’re mainly used for Direct Debits and Direct Credits from organisations and are used for different types of bank transfers like making salary payments. Over 160 billion transactions have been debited or credited to British bank accounts via Bacs since its inception in 1968.

All that’s needed to set up a Bacs payment is the recipient’s bank account number, account holder name, and sort code.

A Service User Number (SUN) may also need to be obtained from your own bank or third-party service provider. In the case of a Direct Debit, a first-time authorisation from the account holder is needed to set up pull-based Bacs payments.

For more, see our blog post on 'Am I Eligible for a SUN Number?'

Types of Bacs Payments

There are two types of Bacs payments:

• Direct Debit — Allows a business to take money from a customer’s bank account at regular intervals. With Direct Debits, the payee controls how much and exactly when to pull funds from the customer account.

• Direct Credit — A Direct Credit is when a company pays money into a payee’s account, like a salary payment, expenses, supplier payments and refunds.

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How Long Does a Bacs Payment Take to Clear?

Typically, Bacs payments take up to three working days from being sent to being completed and appearing in the recipient’s bank account.

Here’s how the process normally works:

• Day 1: The Bacs payment request is submitted.
• Day 2: The recipient bank receives the payment.
• Day 3: The funds are cleared to the recipient and the transaction is complete.

It’s important to remember that this process only accounts for working days, which are Monday to Friday. If a payment is submitted on a Friday, it will not be processed until the following Monday. If Monday is a bank holiday, then the next working day will be Tuesday.

In some cases, like Christmas, Monday and Tuesday can both be bank holidays. In this instance, the next working day would be Wednesday.

Faster Alternatives to Bacs Payments

If the payment being sent is an urgent one, Bacs isn’t the best option, especially if being sent on a Friday. With the weekend interrupting the process, the payment will take up to five days in total. So, if you’ve got an urgent payment to make, what other options are available to you?

• CHAPS — There are no limits on transactions through the Clearing House Automated Payment System (CHAPS). As long as you submit your payment details by the bank’s cut-off time, transfers are complete on the same day. CHAPS payments are usually used for larger one-off transactions.
• Faster Payments — All UK bank account holders can make instant transfers using Faster Payments. Banks usually set their own limits for these types of payments, but if it’s a smaller amount then this is ideal. These same-day transfers are usually settled in seconds, but can occasionally take up to two hours.
• Open Banking — This facilitates account-to-account payments. Companies can request payment from customers and receive immediate confirmation, with funds arriving either that same day or the next working day.

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