The Bank of London joins the BACS network

The Bank of London will now become a Directly Connected Settling Participant (DCSP) of BACS, which is owned and operated by Pay.UK.

Pay.UK is also responsible for managing the Faster Payment System, which enables 24/7 instant GBP payments between bank accounts in the UK. In March 2022, The Bank of London joined the Faster Payment System as DCSP.

BACS is a payment scheme founded in 1968 that allows individual transactions below GBP 20 million in the UK and its Crown Dependencies, The Isle of Man, Guernsey, Jersey, and Gibraltar.

It processes Bacs Direct Credits which are widely used to pay salaries, benefits, dividends, and supplier payments directly into UK bank accounts. It also processes Direct Debits, which automate the collection of regular payments and is the preferred payment method for many UK billpayers.

According to the scheme, more than 150 billion transactions have been debited or credited to British bank accounts via BACS since its inception and, in 2021 alone, the payment system facilitated 6.5 billion payments, at a value of more than GBP 5 trillion.

What is BACS?

Although Bacs is widely used and trusted, if account holders need payments to clear faster than three days, they may opt for Faster Payment Service (FPS), which can process transactions on the same day.

However, FPS does not allow funds that exceed GBP 250,000. For this reason, businesses tend to rely on BACS payments for larger, recurring payments. Because BACS charges low transaction fees for businesses – anywhere from GBP 0.05 to GBP 0.50 – its payment structure is especially attractive to those who engage in recurring and bulk payments.

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.

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.