A Beginner's Guide to Bacs Payment Services

Monday, 14 May 2018

A Beginner's Guide to Bacs Payment Services

Posted by Rahul Gupta
A money-driven culture needs tools to move that currency around safely and reliably. Up until the late 60’s, all transactions had to be handled manually using paper documents. In 1968, what is known as the modern Bacs system was born as a way to automate the process of transferring funds. Since then, it has grown into the most extensive money transfer network in the UK.
Bacs Payment Services
There is a line in the sand between having productive, loyal customers (and employees), and losing them to your competitors;  it all hinges on accurate and prompt receipt of payments and wages. As an example, almost 90% of all wages in the UK are paid using the Bacs system, including benefits and pensions.

Understanding the primary function of Bacs payment services is vital for any business operating in the UK.

Overview of Services

The Bacs network consists of some of the most massive banking bodies in the UK that have come together to offer a standardized clearing-house that everybody can use. This group dictates the rules and regulations for anyone who wants to take advantage of any service Bacs offers. The government supports the initiative, requiring that the Bacs group comply with all regulations. 

Their Current Account Switch Service promotes competition among banking institutions by giving customers an easy way to switch providers if they’re not getting the service they need. Some days, more than 100 million transactions are handled by Bacs. For businesses to be successful, a good understanding of the basics is crucial.

Thankfully, streamlined help with processing Bacs payments can be found in the form of software tools. Programs like AccessPay can help someone new to Bacs payment services by guiding them through the steps, checking for errors, and automating menial tasks. If your company handles a lot of Bacs payments and needs a better way to track everything, consider AccessPay to make record keeping easier.

Direct Credit

Bacs Direct Credit allows a transfer from your bank account to another, usually taking three business days to complete. Direct Credit is the most common way to pay out wages, pensions, and benefits. This service is for anyone who needs to make regular payments at low cost – and when the time isn’t a major concern. If you’re making multiple payments often, then you may find benefit in using a Bacs approved software package to manage your transactions. Having direct access to make payments through the use of software can save you a lot of time and money if you’re working at volume.

Your payee’s bank account number and sort code are the minimum information required to complete a transfer; this information can be obtained by the payee contacting their financial institution or looking at their statements. The Direct Credit system allows payments to be scheduled up to a month in advance and changes to be made to a submitted payment before it is accepted. This gives the payer complete control of when and how money is transferred between accounts.

Direct Debit

Once only accessible to large organizations (but recently available to anyone through a service like GoCardless), Direct Debit allows businesses to authorize the collection of funds from your account by another entity. This product is commonly used in the paying of bills or making donations; it is safer than cash or cheque and fully backed to guarantee your funds get to where they are supposed to go. 

Like Direct Credit, funds sent using the Direct Debit network usually take three days to clear. Direct Debit offers the ability to schedule recurring payments for amounts that don’t change month to month. This is the preferred Bacs method, with more than 60% of the population using it.

Merchants can take advantage of Direct Debit through subscriptions, accounts, and more. The amount billed each period can even be changed on the fly, without having to be re-authorized each time. Any company that bills for their services knows that collections can sometimes be a pain: Direct Debit gives you some control by letting you collect your money when it’s due. It isn’t hard to see why so many businesses rely on this system for their needs.

Bacs payment services are an absolute necessity to modern life in the UK – both for consumers and businesses. Everyone has benefited from Bacs in one way or another. You won’t get very far without a good understanding of what these products can do for business, so be sure to familiarise yourself with each service.

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