A guide to BACS payment
A BACS payment (Bankers Automated Clearing Services) is an electronic bank-to-bank transfer and is one of the most commonly used methods of electronic payment in the UK.
BACS is now run by BACS Payment Schemes Limited which consists of multiple leading banks within the UK.
There are two types of BACS payments which include direct debit and direct credit. Direct debit is where another party has been permitted to withdraw funds from your bank account, and direct credit is where another party deposits funds into your bank account.
What is the processing time of a BACS payment?
A BACS payment typically takes up to three working days to process – this is the same for both direct debit and direct credit. Many businesses often use BACS payments for payroll purposes as they can be set up ahead of a scheduled payment date. Other typical uses for BACS payments include household bills and monthly subscriptions.
What information is needed to send a BACS payment?
Sending a BACS payment is very straightforward, with just the following information required:
- Name of the recipient
- Name of the recipient’s bank
- Recipient’s bank account number
- Recipient’s sort code
Is there a charge for sending a BACS payment?
BACS payments are one of the most inexpensive payment methods in the UK, with transaction fees averaging out at 23p.
How does BACS differ from CHAPS and Faster Payments?
BACS, CHAPS and Faster Payments are three of the most popular payment schemes in the UK, each having their own set of benefits.
A CHAPS payment (Clearing House Automated Payment System) is typically used for high-value cash transfers, often recommended for those of £10,000. The benefit of CHAPS payments is that they can be settled immediately, meaning funds usually arrive the same day if processed within the bank’s cut off period. CHAPS is also a costlier option, however, with banks often charging a fee between £25-30.
Faster Payments is an ideal option for making smaller payments quickly as funds tend to arrive in the payee’s bank account immediately. There is no charge for sending Faster Payments and is often used for sending money to a friend.
Can BACS be used for international payments?
Typically, SWIFT payments (Society for Worldwide Interbank Financial Telecommunication) are used for sending overseas payments in the UK. Most UK banks offer SWIFT as a transfer option, with it usually taking around 2-5 working days to process and a transfer fee being charged, which can vary between banks.
When sending international payments, it’s often recommended to seek advice from a foreign exchange specialist. At Halo Financial, our team of Currency Consultants will help you discover the best option for sending money abroad, helping you save both time and money. To find out more, please give us a call on 020 7350 5474.
Read about: ACH Payments