A Comprehensive Guide to Bacs Payment


Bacs payments is an abbreviation for Bankers’ Automated Clearing Services are a cornerstone of the UK’s financial system, facilitating the electronic transfer of funds between banks. These payments are crucial for businesses and individuals alike, enabling seamless salary payments, bill settlements, and direct debits. 

Understanding Bacs is essential for employers managing payroll, businesses handling supplier payments, and anyone dealing with regular financial transactions. 

Whether you are a small business owner, an accountant, or simply someone who wants to manage your finances more efficiently, having a grasp on Bacs payments can streamline your financial processes and ensure smooth, timely transactions.

What is a Bacs Payment?

A Bacs payment is a method of electronic fund transfer used within the UK to move money directly from one bank account to another. This system is managed by Pay.UK is integral to the financial infrastructure, handling millions of transactions daily. Bacs payments encompass Direct Debits and Bacs Direct Credits, making them essential for regular payments like salaries, pensions, and supplier invoices. 

One of the key concerns often addressed is whether Bacs payments are protected. Indeed, Bacs payments are safeguarded by rigorous security protocols and regulations, ensuring that transactions are reliable and secure. 

When processing Bacs payments, Bacs remittance advice is typically sent to inform the recipient of the payment details, fostering transparency and accuracy in financial dealings.

Types of Bacs Payments

Bacs payments come in two primary types: Direct Debits and Bacs Direct Credits. Both play a vital role in the UK’s financial ecosystem, each serving distinct purposes and benefiting different user groups. Direct Debits are often used for recurring payments, where the payer authorises the payee to collect varying amounts from their account. 

On the other hand, Bacs Direct Credits are used to make payments directly into bank accounts, commonly for salaries and other regular disbursements. Understanding these types is crucial for efficiently managing financial transactions and ensuring smooth operations.

1. Direct Debits

  • They are used for recurring payments like utility bills, subscriptions, and loan repayments.
  • The payee collects varying amounts from the payer’s account.
  • It requires authorisation from the payer to set it up.
  • It provides flexibility for the payer as payments are automatically debited.

2. Bacs Direct Credits

  • Used for making payments directly into bank accounts, such as salaries, pensions, and supplier payments.
  • Typically, it involves fixed amounts, although variations can occur.
  • Requires the payer to initiate the transaction.
  • Offers a reliable and efficient way to handle bulk payments.

Bacs Advantages and Disadvantages

Bacs payments offer numerous advantages, making them a popular choice for businesses and individuals managing regular financial transactions. However, they also come with some disadvantages that are important to consider.

Understanding both the benefits and limitations of Bacs payments can help users make informed decisions and optimise their financial processes.





Cost-effective for bulk payments, reducing transaction fees.

Initial setup and maintenance may require resources.


High level of security with strict regulatory compliance.

Potential for delays if issues arise in the clearing process.


Automates regular payments, saving time and reducing errors.

Payments are not instant; processing can take up to three days.


Streamlines payroll and supplier payments, improving cash flow management.

Requires accurate setup to avoid payment errors.


A well-established system with a track record of reliability.

Limited to UK-based transactions.


Provides control over payment schedules and amounts.

Changes in payment details require reauthorisation.

Difference Between Bacs and Bank Transfer

Bacs payments and traditional bank transfers are both methods of transferring money between bank accounts, but they differ significantly in their processes, speed, and use cases. Understanding these differences is crucial for choosing the right payment method for various financial transactions..

While Bacs payments are typically used for scheduled, bulk transactions such as payroll and supplier payments, traditional bank transfers are more suited for individual, ad-hoc payments. The differences extend to processing times, costs, and security measures.


Bacs Payments

Bank Transfers

Processing Time

It takes up to three working days to complete.

It can be immediate (Faster Payments) or take a few hours to a day (CHAPS and standard bank transfers).


Generally, it has a low cost, especially for bulk transactions.

Varies; Faster Payments are usually free, while CHAPS can be expensive.

Use Cases

Ideal for payroll, supplier payments, and regular, recurring transactions.

Suitable for one-off payments and urgent transfers.


Highly secure with stringent regulatory compliance.

Secure, but the level of security may vary between banks and transfer types.


The payer controls the schedule and amount of payments.

Immediate control over individual transactions.

International Transfers

Limited to UK-based transactions.

It can be used for international transfers, depending on the service.


Often accompanied by remittance advice for record-keeping.

Confirmation is typically provided by the bank upon completion.

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Banks using Bacs

financial institutions. These banks rely on Bacs to facilitate seamless electronic transactions, including Direct Debits and Direct Credits. This system ensures efficient and secure handling of bulk payments, benefiting both businesses and individuals. Below is a comprehensive list of banks that use Bacs, showcasing the breadth of its adoption across the financial sector.

  • 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
  • HSBC Bank PLC
  • HSBC UK Bank PLC
  • Lloyds Bank PLC
  • Metro Bank
  • Modulr
  • Nationwide Building Society
  • NatWest
  • Northern Bank
  • PayrNet
  • Santander
  • Starling Bank
  • The Access Bank UK
  • The Co-operative Bank
  • The Royal Bank of Scotland
  • TSB
  • Turkish Bank UK
  • Virgin Money

How Long Do Bacs Payments Take?

Bacs payments are known for their reliability and efficiency, but it’s important to note that they are not instant. Typically, a Bacs payment takes three working days to be fully processed. This timeframe applies to both Direct Debits and Direct Credits. 

The processing schedule is structured and predictable, ensuring that users can plan their transactions accordingly. Here’s a detailed breakdown of the Bacs payment timeline:

  • Day 1: The payment is submitted to the Bacs system by the payer’s bank.
  • Day 2: The payment is processed by the bank and sent to the receiving bank.
  • Day 3: The funds are transferred, and the payment is settled in the recipient’s account.

Understanding this three-day cycle is crucial for managing your finances effectively. Here’s what you can expect based on the day a Bacs payment is initiated:

Bacs payment made on Monday: It will be clear by Wednesday.

Bacs payment made on Tuesday: It will be clear by Thursday.

Bacs payment made on Wednesday: It will be clear by Friday.

Bacs payment made on Thursday: It will be clear by Monday.

Bacs payment made on Friday: It will be clear by Tuesday.

How to Pay by Bacs?

Bacs payments are a safe and reliable way to transfer money electronically within the UK. To make a Bacs payment, you will need specific information about both the payer and the recipient. This includes the recipient’s name, bank name, account number, and sort code, as well as the same details for the account from which the payment will be withdrawn. 

It’s essential to ensure all details are accurate to avoid any delays or errors in the transaction. While Starling Bank customers can receive Bacs payments, they currently cannot initiate them directly through their accounts.

Method for Payment by Bacs:

1.Gather Required Information:

  • Recipient’s name.
  • Recipient’s bank name.
  • Recipient’s account number.
  • Recipient’s sort code.
  • Your account number and sort code.
2.Initiate the Payment:
  • Log in to your online banking platform or visit your bank branch.
  • Navigate to the payment section and select “Bacs Transfer” or “Payment by Bacs.”
  • Enter the recipient’s details accurately.
  • Enter the account details of the account from which the payment will be made.
3. Submit the Payment:
  • Double-check all the details you entered to ensure accuracy.
  • Confirm the amount to be transferred.
  • Authorise the payment as per your bank’s security protocols (this might involve entering a one-time password, using a security token, or other authentication methods).
4.Monitor the Payment:
  • Once submitted, the payment will go through the Bacs processing cycle, typically taking three working days to clear.
  • Keep track of the payment status through your online banking platform or any notifications from your bank.
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Bacs payments provide a secure and efficient method for transferring funds electronically across the UK. Whether for recurring transactions like payroll or one-time payments to suppliers, understanding what Bacs payments entail ensures smoother financial operations for businesses and individuals alike. Mastering this essential aspect of banking facilitates better cash flow management and reliability in financial transactions.


Ans: Bacs payments are processed during working hours on banking days, typically between 7 AM and 10 PM.
Ans: No, Bacs payments are not instant. They typically take three working days to clear.
Ans: No, Bacs payments are only processed on working days (Monday to Friday), excluding bank holidays.
Ans: While uncommon, Bacs payments can sometimes take longer than three days due to various factors, such as bank processing times or bank holidays.
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  • Email: office@evirtualaccountants.co.uk 
  • Address: 862-864 Washwood Heath Rd, Ward End, Birmingham, B8 2NG
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