What is a Bacs payment? How to transfer money with Bacs

Running a business means handling payments day in and day out, from paying your staff to collecting money from customers. While there are plenty of ways to move money around, one of the most trusted methods in the UK is the Bacs payment.

But what is Bacs, and how does it work for businesses? 

Keep reading as we explain exactly what it is, what it stands for, how long Bacs takes, and when it’s the right option for your business. 

What does Bacs stand for?

Bacs stands for Bankers’ Automated Clearing Services, and it’s a regulated payment service for electronically sending money between UK bank accounts.

The service has been around since 1968 and has played a big role in keeping businesses running smoothly by handling payroll, supplier payments, and customer transactions. Today, Bacs is managed by Pay.uk, and since its launch, it’s processed more than 160 billion transactions and facilitated payments with a value of up to £5.8 trillion in 2024.

Bacs payments are a popular method of payment used daily by millions of consumers, businesses, and charities via traditional banks, building societies, and payment service providers (PSPs).  

What is a Bacs payment?

A Bacs payment is a type of bank-to-bank transfer within the UK. It’s popular with businesses because it’s low-cost, secure, and well-suited to managing regular transactions.

There are two types of Bacs payments:

• Direct Debit – This is when a business or individual has permission from another party to collect money from their bank account, often on a regular basis. People generally use it to pay utility bills, memberships, or subscription services. They can be used to take one-off and recurring payments.
  
  
• Direct Credit – Also called a ‘bank transfer,’ direct credit occurs when one party sends money to another account. For businesses, it could be used for making salary payments, pension contributions, supplier invoices, or customer refunds.

In summary, Direct Debit collects payments from another person’s account with their permission, while Direct Credit is used to pay others.

Are Bacs payments the same as a bank transfer?

A Bacs payment is a type of bank transfer, but not every bank transfer is a Bacs payment. In the UK, there are three main systems that businesses use to send money between accounts. These are all classed under the umbrella term of a ‘bank transfer’, but each has its own differences and use cases:

• Bacs – Best for routine payments like salaries, invoices, and customer direct debits. These take up to three working days to clear.
  
  
• CHAPs – A same-day service often used for high-value payments (such as property transactions). You can read up on CHAPs payments here.
  
  
• Faster Payments – These are designed for sending up to £1 million in real-time via online, telephone, mobile banking apps, or in a bank branch. According to Pay.uk, 467,980,750 Faster Payments were made in June 2025 with a total value of £389,874,217,334.

So while Bacs is technically a bank transfer method, it’s usually chosen for regular, non-urgent business transactions because it’s reliable, low-cost, and widely supported by UK banks.

How do Bacs payments work?

A Bacs payment moves money directly between two UK bank accounts, but unlike Faster Payments, it isn’t instant. The process follows a set three-day cycle:

1. Day 1 – Submission
   A business (or its bank/payment provider) submits the payment instructions to Bacs, including the recipient’s account number, sort code, and payment reference.
   
   
2. Day 2 – Processing
   Bacs processes the instructions, checks security details, and validates the payment.
   
   
3. Day 3 – Payment clears
   Funds are credited to the recipient’s account by Direct Debit or Credit, usually first thing in the morning (around 7 AM).

How long does a Bacs payment take?

A Bacs payment usually takes up to three working days to clear from start to finish. 

However, it’s important to remember that you can only submit Bacs payments on weekdays from 7 AM to 10:30 PM, and cash won’t move over weekends or bank holidays. For example, if you submit a payment on a Friday, it likely won’t clear until early morning of the following Tuesday, usually around 7 AM.

This makes Bacs a little slower than alternatives like Faster Payments, but it’s still one of the most reliable and cost-effective ways to transfer money in the UK.

How to make a Bacs payment online

Making a Bacs payment online is usually done through your bank or payment provider’s website or platform, and it should be straightforward once you have the correct details. Don’t forget, you’ll need the recipient’s sort code, account number, and payment reference. 

Here’s how the process usually works for businesses:

1. Log in to your online banking or payment provider portal.
2. Find the payments or transfers page where you can set up a transaction.
3. Select Bacs as the payment type (some banks label this as a standard transfer).
4. Enter the recipient’s details; this is sometimes called ‘Bacs details’.
5. Choose the amount you want to pay.
6. Review all the information to make sure it’s correct.
7. Confirm the payment amount and submit the payment for processing.
8. You may also need to authenticate the transaction via a security device.

If you’re thinking about making a Bacs payment online, don’t forget that:

• You can’t make a Bacs payment with a credit card — it only works bank-to-bank.
• If you’re paying staff or suppliers, you can also schedule regular Bacs Direct Credits to save time.
• Customers paying you via Bacs can set up Direct Debits for subscriptions or repeat payments.

How much does a Bacs payment cost and are there limits?

One of the reasons Bacs is so popular is that it’s one of the cheapest payment methods available for sending money between bank accounts. 

A typical Bacs transfer costs between 5p and 50p per transaction, plus any additional fees charged by your bank or payment service provider. This makes it a lot more cost-effective than alternatives like CHAPS, which usually carry higher fees.

Bacs payments also have limits, but these are much higher than those placed on Faster Payments. Bacs allows transfers of up to £20 million per transaction, but your bank may set a lower cap. 

For most small businesses, these limits are more than enough to cover regular payroll, supplier invoices, or customer refunds.

Are Bacs payments safe?

Yes, Bacs payments are one of the safest ways to transfer money in the UK – especially for businesses. Since the system launched in 1968, it’s made over 140 billion transactions and is trusted by millions of businesses, government bodies, and charities daily to securely deliver funds electronically.

Security is built into every step of the process:

• Payments are submitted through Bacstel-IP, a secure online service protected by SSL encryption. SSL encryption ensures that the data from online payments is safe as it’s transmitted; you can read more about it and other payment security measures here.
• Businesses need a password and an authentication process to send transactions.
• All payments are monitored and validated before they clear.
• Only approved organisations are authorised to collect funds by direct debit.

What are the benefits of Bacs payments?

For small businesses, Bacs payments offer a mix of reliability, affordability, and convenience. Some of the key benefits include:

• Low cost – With transaction fees typically only a few pence, Bacs is one of the cheapest ways to move money between accounts.
• Safe and secure – With security a top concern for consumers when making online payments, businesses want to assure their customers and colleagues that they’re dealing with funds in a safe way. Bacs has become one of the most trusted methods of payment in the UK, thanks to its tried-and-tested process of secure money transfers.  
• Payment scheduling – You can set up regular Direct Debits or Direct Credits, making it easier to manage recurring payments, regular invoices, or customer subscriptions.

What are the disadvantages of Bacs payments?

While Bacs is a popular choice for businesses, it does come with some limitations to be aware of:

• Slower processing times – Bacs payments are slower than both CHAPs and Faster Payments, taking up to three working days to clear, which isn’t ideal if you need to send money urgently. If you’re sending or receiving a time-sensitive payment, it’s important to factor in the weekend when calculating how many days you need.
• Weekday-only service – Bacs doesn’t process payments over weekends or bank holidays. If you submit a payment late on Friday, it won’t arrive until Tuesday.
• Cut-off times – Bacs has strict cut-off times for submitting payments, often in the early evening, but your bank or provider sets this. Miss the window, and your payment will be delayed.
• UK only – Bacs can’t be used for international transfers; it’s limited to payments between UK bank accounts.

Can a Bacs payment be recalled or cancelled?

In most cases, once a Bacs payment has been submitted, it can’t be cancelled. That’s because the system is designed to be fast, reliable, and secure. 

However, there are a few exceptions:

• Before processing – If you spot an error on the same day you submit a payment, before it’s submitted for processing, some banks may allow you to cancel it before the cut-off time.
• Before settlement – If you get in touch with your bank to cancel or change the payment at least one working day before it’s due, your bank may be able to stop the transaction.
• Duplicate or incorrect payments – In certain circumstances, your bank can request a recall, but this isn’t guaranteed.
• Fraud – If a payment is proven to be fraudulent, protections are in place to help recover the funds. With scam attempts, unfortunately, becoming more and more widespread, it’s useful to be aware of what tactics to be suspicious of. Read more about common scams to watch out for and how to prevent them here.

Once the money has been transferred into the recipient’s account, it becomes much harder to recover the funds.

For businesses, it’s important to double-check details like account numbers, sort codes, and payment amounts before submitting. Once the payment reaches day two of the Bacs cycle, it’s almost always too late to recall.

Which UK banks support Bacs payments?

Almost all major UK banks and building societies support Bacs payments, along with a growing number of challenger banks and payment service providers. This means that whatever you need Bacs for, chances are your bank offers it as an option.

As of August 2025, 32 banks are Bacs payment participants:

• Allied Irish Bank
• Atom bank
• Bank of England
• Bank of Scotland plc
• ​Barclays Bank plc
• Barclays Bank UK plc
• Citibank NA
• ClearBank®
• Clydesdale Bank plc
• Coutts & Co
• Goldman Sachs
• HSBC Bank plc
• HSBC UK Bank plc
• LHV
• Lloyds Bank plc
• Metro Bank
• Modulr
• Monzo Bank Limited
• Nationwide Building Society
• NatWest
• Northern Bank Limited t/a Danske Bank
• PayrNet​​
• Santander
• Starling Bank
• Société Générale
• The Access Bank UK​​
• The Bank of London
• The Co-operative Bank
• The Royal Bank of Scotland ​
• TSB
• Turkish Bank UK
• Virgin Money

Frequently asked questions

Is Bacs the same as a bank transfer?

Bacs payments are a type of bank transfer, along with Faster Payments and CHAPS, which are quicker but may come with higher fees. So while Bacs are technically a bank transfer, not all bank transfers are made using Bacs, and the two aren’t entirely interchangeable.

What time do Bacs payments go in?

Bacs payments usually clear in the recipient’s account early in the morning, often between 1 and 7 AM. If it hasn’t gone in by 7 AM, the money will likely be credited the next working day. This means that if you make a payment on a Friday, the funds will probably reach the recipient on Tuesday morning.

What does ‘Bacs credit’ mean?

If you see ‘Bacs credit’ on your bank statement, it simply means that money has been paid into your account via a Bacs transfer. Common examples include salary payments from an employer, tax rebates from HMRC, or refunds from a business.

For businesses, it’s worth knowing in case customers ask what ‘Bacs credit’ means. For customers, you can reassure them that it’s a straightforward and widely used method for sending and receiving money.

Keep your payments running smoothly with takepayments

Bacs payments are a reliable, cost-effective way for businesses to manage incoming and outgoing payments. Whether you’re paying employees or suppliers or receiving regular payments from customers, Bacs is a secure method trusted by UK banks nationwide.

If you’re looking for a payment solution that suits your needs, takepayments can help. Explore our range of card machines, POS systems, and online payment solutions to find the right fit for your business.

Need more guidance on accepting payments? Contact our experts today to find out how we can help streamline your payment process.

Jodie Wilkinson

Head of Strategic Partnerships