Is your business looking to start processing Bacs payments for the first time? This guide will answer the most common questions about Bacs and Bacs payments to help you kickstart your journey.
Whether you’re a small, medium or large sized business, efficient Bacs payment processing is essential for a smooth cash flow.
In this guide, we will explain what Bacs processing is, how it works and the benefits it can offer to businesses like yours.
Bacs is an electronic payment system that lets businesses make payments directly from one bank account to another. It’s the standard payment method used by businesses across the country, with Bacs acting as the central clearing house for all UK banks.
A Bacs payment is an electronic transfer from one bank to another. There are two different types of Bacs payments, called Direct Credit and Direct Debit.
• Direct Credits are used by businesses to make payments, sending an electronic deposit directly to a bank account. Direct Credits are commonly used to pay staff salaries or to credit suppliers.
• Direct Debits are used by businesses to collect payments from their customers. The customer authorises the business to collect funds directly from their account, and the business communicates how much will be collected, on what date, and how often the payment will reoccur. Direct Debits are ideal for recurring bills and subscriptions, for instance a monthly gym membership fee.
Being one of the most secure, cost-efficient and convenient types of electronic payment, millions of Bacs transactions are processed every day.
The processing time for Bacs payments (both credits and debits), usually takes three working days:
Day 1 (submission day): The payment instruction (credit or debit) is sent to Bacs.
Day 2 (processing day): The bank processes the payment request.
Day 3 (due date): The transaction is completed, with funds transferred from the sender’s account to the recipient’s account.
When making a Bacs payment, you must provide at least the recipient’s sort code, account number, name, and the payment amount. For debits, including a reference is mandatory.
Bacs payments are accessible to anyone through a bank offering the service. There are also Bacs products and services, which are easier, faster and less prone to errors compared to using bank portals and a Bacs bureau to handle transfers on your behalf. However, before you can begin you will need access to a SUN.
A SUN (Service User Number) is a unique identifier assigned to businesses that process Bacs payments. Without a SUN, you cannot send or receive electronic Bacs payments.
Your business can attain a SUN in one of two ways. The first is to apply for sponsorship from a major UK bank, which will provide you with your own SUN giving you more control over your payments and data. However, the application process will require your business to meet certain criteria depending on the bank, as well as demonstrate that you can effectively uphold the direct debit scheme rules and maintain low submission errors. While suitable for some businesses this is not always the best option.
The second and perhaps easier way is to work with a third party to set up and manage an indirect SUN on your behalf. Typically, the best way to do this is to work with a Bacs Bureau, which will carry out the process for you and help with all the manual work involved.
Essentially, a Bacs bureau submits Bacs payments for businesses safely and correctly on their behalf. Acting as a secure intermediary between a company and the Bacs payment network, a Bacs Bureau handes the preparation, validation, and submission of payment files.
Bacs bureaus play a crucial role for businesses, by automating and processing Bacs payments and collections and eliminating the need for dedicated software. Companies typically use a Bacs Bureau when they:
• Don’t have their own SUN (Service User Number)
• Want to outsource payment processing
• Need compliance, security, and expertise
• Want to reduce admin around Bacs submissions
A Bacs bureau can also provide more than just payment processing. Their expertise, enhanced Bacs payment processing functionality and compliance support can all provide a much smoother Bacs payment processing experience for your business.
For more information, read our blog on “How to choose the best Bacs supplier for your business”.
Bacs reports give valuable feedback on your credit payments, Direct Debit collections, and Direct Debit instructions. Multiple reports are generated by the Bacs service, each offering different information. Certain reports must be acted upon as per payment regulations.
Bacs payments offer a number of different benefits to your business:
• Cost-effective: Compared to traditional cheques, Bacs payments are not only cheaper but also eliminate the need for postage.
• Time-Saving: Reconciling transactions becomes a breeze as Bacs generates a single debit from your account, eliminating the hassle of tracking individual payments. The automated nature of Bacs processing eliminates the need for manual intervention, saving time for both businesses and customers.
• Security: Bacs transactions are highly secure, reducing the risk of fraud and ensuring the protection of sensitive financial information.
• Improved cashflow: Businesses can plan their cash flow more effectively with Bacs processing, as payment dates are agreed in advance for direct debits.
• Customer convenience: For businesses using direct debits, Bacs provides a convenient payment option for customers, making it easier for them to manage their payments.
In addition to Bacs payments, there are alternative payment options available in the UK:
• Faster Payments: Ensures quicker payment clearance, typically within 2 hours.
• CHAPS (Clearing house automated payment system): Commonly used for larger fund transfers, usually completed within 1 working day.
While these methods offer faster processing, be cautious about errors, as cancellations can be challenging. Additionally, they are generally more expensive per transaction compared to Bacs, and less suited to bulk-transactions.
At paygate, we boast a rich heritage in facilitating efficient Bacs payments for businesses.
Our payment platform stands as one of the longest-established Bacs approved software solutions on the market. As trusted experts in the field, we’re here to assist you every step of the way.
Contact us today to explore your ideal Bacs payment solution. Learn more about the paygate platform here or ccomplete the form below to get in touch with one of our Bacs experts.
If you’d like to discuss your business requirements and how paygate can help, get in touch.
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The Bacs processing cycle is the structured timeline used to move payments through the Bacs network. It involves submitting payment instructions, processing them through the banking system, and delivering funds to recipient accounts.
The full process typically takes three working days. Payments are submitted on the first day, processed by banks on the second day and credited to accounts on the third day.
Data validation tools analyse account numbers and sort codes against industry rules and reference data to confirm they are valid. This helps ensure bank details are correct before a payment is submitted.
Common issues include incorrect account details, missed submission deadlines or formatting errors within payment files, all of which can delay processing or cause payment rejection.
Businesses can streamline workflows by automating file generation, validating data before submission and integrating payment software with finance or payroll systems. Automating the transfer of files into your Bacs software helps avoid delays, protects sensitive data and reduces fraud risk.
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Security policy manager * Includes: password complexity manager, inactive timeout, time restrictions, IP address restrictions | ✓ | ✓ | ✓ |
AWS ISO27001 hosted * Primary fail over and back up UK data centres | ✓ | ✓ | |
SFTP file uploads/downloads *Secure way to move files across the internet, customers can use their own certificates | ✓ | ✓ | ✓ |
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APP MFA * Works with common auth apps such as Google Authenticator, Authy. Works on Android or iOS. | ✓ | ||
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Fraud tool *Currently support Blacklists and Whitelists. In a blacklist you add various sortcodes / account numbers and the system will prevent any payment to those accounts. In a whitelist you add sortcodes and account numbers and the system will ONLY allow payments to accounts on the whitelist. We include various tools to help build and maintain the lists. | ✓ | ||
GDPR subject access request * Search tools to help perform a GDRP lookup. Then can optionally ‘sanitise’ personal data from the system. | ✓ | ✓ | ✓ |
GDPR Data cleansing *Remove historical data by bulk or individual. | ✓ | ||
Browser compatbility * We maintain support for Chrome, Edge and Firefox. | ✓ | ||
Built for performance * Version 3 runs on super modern, high-end infrastructure | ✓ | ||
Single Platform * Customers have a single user account that they can use across all services (Enterprise, Online, Validate, etc). | ✓ | ||
Agent rebuilt key management system * Very secure way to get files to and from the Paygate cloud. Supports ways to automate files being sent into the paygate cloud and retrieving reports from the cloud. Key management was rebuilt for V3 to further increase security. | ✓ | ||
HTTPS uploads/downloads * paygate v3 supports both SFTP and HTTPS. | ✓ | ||
In browser File and Folder handling * Allows customers to securely organise their files and folders that are stored on paygate | ✓ |
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Auto File Import *Automatically imports a payment file and validates it. Users no longer need to manually browse for and import a file, paygate will do this in the background and present the validation results to the user. |
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New scheduler triggers * A new trigger type that allows the user to set up a workflow like you set up a meeting in Outlook. For some, this is more flexible and easier to understand than using CRON. |
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Triggers for multiple workflows * You can use a single trigger to start multiple workflows. It’s a simple feature that will make things easier to manage if you have a lot of workflows. |
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Workflow validation * Troubleshoots new workflows, validation |
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Workflow chaining * Allows a workflow to call another workflow. Using this you can simplify large complicated workflows in smaller separate ones. Easier to manage and diagnose issues. |
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Multiple filename variables * Supporting multiple filename variables should make designing complex workflows a bit easier. |
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Future developments * Pure Excel Importer – XLSX; BACS Calendar Widget; Workflow Timeline; Workflow / Mobile App notification / management; S3 Connector |
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Download and distribute A Reports * When you have workflow and HSM you can automate the entire BACS report download process. They can automatically be converted to other formats for integration into finance apps. They can be emailed to customers as html, pdf or zips. They can be made available for collection via SFTP. Or, if you use Agent, they can be security delivered to the customer’s private network. |
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Drag and drop files from anywhere *Like in other areas of V3. User can just drag and drop file in Bureau for processing. They can also use the Restricted File Browser and Server file browser – that add more security – if they wish. |
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Support for multiple file formats per submission * No longer limited to single Standard 18 submission for example
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Better default filename support *Makes working with files easier. |
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Usage Reporting over data range *Small but useful improvement to reporting. User can set a date range on the usage report. |
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Validate *Validate is integrated in V3 and so customers that have both products can access them from the same client with the same account. |
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