When busy working in day-today, it’s unlikely that you get the time to explore exactly how Bacs payments actually operate.
However, if your business wishes to automate, grow or report on customer payments, support through one of the most reliable and efficient payment systems in the UK makes sense.
According to the latest Bank of England figures, the net value of Bacs (£mn) stood at £5,515 through Q1 2025. This has risen from £5,175 in Q4 2024, highlighting the continued growth& adoption of Bacs payment services throughout the country.
Direct Debits, one of the two main forms of Bacs payments, is the most common payment method across all financial commitments for consumers. With this in mind, enterprises that offer their customers the option to pay for goods and services by Direct Debit are likely to maintain and grow their customer base.
Why are Bacs payment services so popular? There’s no doubt that the level of security afforded to both businesses and customers, easy accessibility, flexibility and enhanced efficiency involved in the process inspires trust in both consumers and organisations.
Contents
- Importance of Bacs payments in the UK.
- How do Bacs payments work?
- Does my business need a SUN?
- Why Bacs payment services with Interbacs?
Importance of Bacs payments in the UK
Simply put, Bacs payments are the backbone of the UK’s financial ecosystem. They provide a framework for the smooth and efficient functioning of transactions between businesses, alongside those that occur between businesses and individuals.
The ability to automate elements of Bacs payments further increases the streamlined and productive nature of the system, enabling enterprises to organise, administer and maintain payments from customers and with other businesses to ensure that priorities are met and objectives are achieved.
Bacs payments come in two forms: Direct Debits and Direct Credits.
- Direct Debits are payments where a customer completes a Direct Debit mandate with their personal details. Once this is approved and shared with Bacs, your customer can pay for your goods or services with regular payments, irregular or even one-off transactions.
- Direct Credits are typically used to pay salaries and pensions, or to give refunds. Many UK organisations optimise the Direct Credit payment system in this way, with 8 out of 10 employees paid salaries by Direct Credit.
Customers may ask if Bacs payments are safe. With Bacs payments being the most popular payment system in the UK, you can reassure them that both Direct Debits and Direct Credits are a safe, secure way of transferring money.
How do Bacs payments work?
Bacs payments work by transferring funds between banks in the UK. This process enables businesses to pay other businesses and for customers to pay enterprises for goods and services.
Bacs payments have been overseen and managed by Pay.UK since 2018. In essence, they are an automated clearing house, Bacs services are fundamentally accessed as Direct Debit or Direct Credit payments.
Why Would A Bacs Payment Be Delayed? Both Direct Debits and Direct Credits take three working days to complete. This is because they use the Bacs (Bankers’ Automated Clearing Services) system that has a three-day cycle. This is a cycle that only operates on working days, not weekends or bank holidays.
The three-day Bacs payment cycle looks like this:
Day one
The payment file for a Direct Debit or Direct Credit is submitted to the Bacs system, either by the relevant business or Bacs payment service provider.
Day two
The bank receives the file and starts to process the payment.
Day three
If approved, the payment is removed from the payer’s account and paid into the recipient’s account. The funds should show in the recipient account on this day and should show as being debited from the payer’s account at the same time. This can vary, according to timeframes and the institutions involved.
Does my business need a SUN?
In order for your business to set up Direct Debits for customers, you will need access to a SUN, typically provided via your sponsoring bank. This is a Bacs Service User Number which is a unique identification that enables you to collect Direct Debit payments.
You can apply directly for a Bacs SUN. This may take time to arrange and it may mean that your business teams will have to organise, manage and maintain all of your Direct Debit payment administration as well as reporting. Depending on internal expertise, this may run the risk of filling up diaries and restrict ability to work on other business critical priorities.
If you want to streamline or automate the whole process, you can collaborate with a Bacs approved bureau or software provider, like Interbacs. Your business uses the bureau’s SUN and their teams oversee your whole Direct Debit payment system. This reduces stress, increases productivity and improves the levels of accuracy across your payment collection system. If your teams are comfortable and confident submitting payment files to Bacs autonomously, Interbacs software can help to automate this for you.
Why Bacs payment services with Interbacs?
Here at Interbacs, our Bacs approved software & services are ideal for businesses that need reliable and secure payment processing. Whether you're a small business or a large corporation, we have the expertise to support your needs.
Our services include Direct Debits, Bacs payments, Bacs Direct Credit, and Faster Payments transactions, providing comprehensive solutions for all your payment requirements.
Why not find out more from our friendly team? Contact Interbacs today for a personalised consultation and discover how we can optimise your direct debit processes.
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