Beginner’s guide to starting with Bacs payments 

If you’re new to the world of Bacs payments, this beginner’s guide will provide you with a solid foundation to get started. 



A refresh on what Bacs is


Bacs, which stands for Bankers’ Automated Clearing Services, is one of the most popular and widely used payment methods in the UK.


Bacs is a secure and reliable method for making electronic payments directly from one bank account to another. It’s commonly used for various types of transactions, including payroll, supplier payments, and direct debits. 


Key benefits of using Bacs: 


  • Cost-efficiency: Bacs payments are often more cost-effective than traditional paper-based methods, reducing expenses related to printing, postage and administration.
  • Security: Bacs payments are highly secure with encryption and authentication methods to safeguard sensitive financial information.
  • Reliability: Bacs payments are known for their reliability and consistency. Transactions are processed on specific dates, ensuring timely transfers.
  • Convenience: Bacs eliminates the need for physical checks or cash, making payments faster and more convenient for both businesses and individuals.  



How to get started


So you’ve decided that you want to process payments via Bacs? That’s great! Let’s take a look at the steps to getting started and what you need to do in order to accept/receive payments via Bacs.  



1. Identify the type of Bacs payment you want to use


  • Direct Credit: This is often used for payroll, pensions, and supplier payments. It involves transferring funds directly into recipients’ bank accounts.
  • Direct Debit: With direct debit, you authorise an organisation to collect funds from your bank account for regular payments, such as utility bills or subscriptions.



2. Choose a Bacs-Approved service provider


To process Bacs payments, you’ll need a Bacs-approved service provider. These providers facilitate the electronic submission of payment files to Bacs. Research and choose a reputable provider that aligns with your needs. For guidance on how to choose a provider and the kinds of things you should think about when making your choice, check out our guide 


Generally, Bacs payments are known for being cost-effective compared to other payment methods like CHAPS (Clearing House Automated Payment System) but the cost of can vary very much on several factors, including the service provider you use, the volume of transactions, the type of payments you’re making and any additional services you require. Given the variation in pricing, it’s essential to research and compare different service providers to find the one that offers the best combination of features for your needs. Its important however to always consider factors beyond just the cost, such as the quality of service, ease of use, customer support and the additional features offered by the service provider.



3. Set up a Bacs service user number (SUN)


A SUN is a unique identifier assigned to you by Bacs. You must have a SUN in order to process Bacs payments. It’s essential. Your chosen Bacs provider can assist with obtaining a SUN.


4. Gather your data


You will need to collate all the payment details of your customers in order to process payments. This includes bank account numbers, sort codes and full names. This information will be used to create payment files.



5. Creating the payment files


Using the data you have collected on your customers, you will need to create the payment files. These files will also include payment amounts and payment references which will help you track payments in the future. It is these files that you will use to upload to your chosen provider in order to process the Bacs payments.


6. Submit payment files to Bacs


Once your payment files are ready, you’ll submit them to Bacs through your chosen provider’s system. Bacs will process the files and initiate the fund transfers on the specified dates.



7. Reporting


As Bacs provides comprehensive reporting, you are able to monitor the status of your Bacs payments and keep track of any failed or rejected transactions. 





Bacs payments offer a secure, cost-effective and efficient way to handle your payments. By following this beginner’s guide, you’ll be well-equipped to embark on your Bacs journey.  If you’re interested in getting started, speak to one of our paygate experts who will be happy to help you get up and running – let’s talk


Need to review your payment processes? We’re here to help.

More from our knowledge hub

Book a free Bacs consultation

Book a no-obligation consulting session with one of our Bacs experts. Whether you’re getting started with Bacs or looking to switch supplier, we’re here to offer advice. 



Fill in the form below to get started.