Definition
A Bacs payment is an electronic bank transfer between UK accounts processed through the Bacs scheme, which takes three working days to clear. It is widely used for payroll, supplier payment runs, and Direct Debits. Most one-off UK business payments now go through Faster Payments instead, which usually arrive within minutes.
Also called: Bacs, BACS transfer, Faster Payments, Bacs Direct Debit
Bacs payment in practice
Bacs works in batches: a payment submitted on day one is processed on day two and lands in the recipient's account on day three. Large companies often pay supplier invoices in a weekly or monthly Bacs run, so an invoice that misses the run date can wait another cycle.
Faster Payments are near instant and run around the clock, with limits set by each bank. CHAPS is the same-day option for very large or time-critical amounts, such as property purchases, and usually carries a fee.
Bacs also powers Direct Debit, where a customer authorises a business to collect payments from their account. Every Direct Debit is protected by the Direct Debit Guarantee, which gives the payer an immediate refund if a payment is taken in error.
Example
A Bristol printer invoices a retailer 2,400 GBP on 30-day terms. The retailer's accounts team includes the invoice in its Friday Bacs run, and the money reaches the printer's account the following Tuesday.
Frequently Asked Questions
How long does a Bacs payment take?
Three working days from submission. Weekends and bank holidays do not count, so a payment submitted on a Friday usually arrives on Tuesday.
What is the difference between Bacs and Faster Payments?
Bacs is batch-based and takes three working days. Faster Payments usually arrive within seconds or minutes, any day, which is why most online banking transfers use it.
Related terms
- Sort code A sort code is the six-digit number that identifies a UK bank and branch, usually written in three pairs such as 12-34-56.
- Wire transfer A wire transfer is an electronic payment sent individually from one bank to another, usually settling the same day for domestic transfers and within one to five business days internationally.
- ACH transfer An ACH transfer is an electronic bank-to-bank payment in the United States sent through the Automated Clearing House network.
- Autopay Autopay is an arrangement in which a client authorizes a business to charge their card or debit their bank account automatically each time an invoice is due.
- Remittance advice Remittance advice is a notice a client sends to a supplier to say a payment has been made and which invoices it covers.
This page is for general information only and is not legal, tax, or financial advice. Rules change and vary by location, so consult a qualified lawyer or accountant about your situation.