How long does a BACS payment take? The majority of BACS payments will take three days to clear. This is because BACS works on a three day cycle. Both Direct Debit and Direct Credit transactions take an average of three days to clear, but it can sometimes be faster and sometimes slower.
In this article, we’ll tell you everything you need to know about BACS payments, from why they take three days to clear to what time of day you can expect your BACS payment to clear in your account.
What Is BACS payment?
Bankers Automated Clearing Services or BACS money transfer have been used by businesses across industry for nearly 40 years. It is still one one of the most common ways to send money from one bank to another, making BACS payments one of the main financial solutions today. In fact, more than 6 million payments were recorded through BACS last year alone: 4.5 Million by Direct Debit and 2 million through Direct Credit.
Direct Debit Vs Direct Credit
There are two kinds of BACS payments that you need to be aware of: Direct Debit and Direct Credit. These two types of transaction may sound alike, but the truth is, they are actually opposites.
A Direct Debit involves money being withdrawn from the bank account of a customer. So, you might use the Direct Debit scheme to pay for your electricity bill, your council tax or your gym membership.
Direct Credit is used to deposit money into another bank account. The most common use of the Direct Credit scheme is by employers to pay its staff. In fact, around 150,000 businesses in the UK use Direct Credit to pay the salaries of their employees.
Is BACS The Same As Faster Payment?
Both the BACS and Faster Payment schemes are used by banks to transfer money from one bank account to another. However, there is a small difference between the two payment methods that you should be aware of.
The main difference lies in the time it takes for each scheme work: BACS payments usually take three days to clear while Faster Payments are processed immediately. This means that if someone pays you using BACS, it may take three days before you actually receive the money into your account.
On the other hand, if the same person sends the money through a bank transfer, you’ll usually receive your money pretty much instantly. This is because a bank transfer will typically use the Faster Payments service.
Is A BACS Payment Immediate?
It’s important to note that a BACS payment is not immediate. BACS payments work on a three day cycle. This means that it will take an average of three working days for the money to reach your account after a BACS payment. However, it can sometimes take more or less than three days, so it’s important not to be reliant on this predictive timescale.
Why Do BACS Payments Take 3 Days?
As we’ve already mentioned, both the BACS Direct Debit and Direct Credit payments operate on a three day cycle. This means that both of these payment methods take an average of three working days to clear into a bank account. But why does it take so long for money to reach the recipient? To understand why BACS payments take three days to clear, we need to understand the BACS process. Let’s take a look.
BACS Process – Day 1
On the first day, the request for payment is submitted to BACS. It cannot be processed until this, as BACS will not know that the transaction is about to be requested.
BACS Process – Day 2
On the second day, the bank begins to process the transaction. This involves lining up the transfer and ensuring that everything is ready to go.
BACS Process – Day 3
On the third day, the payment is taken from the account of the sender and simultaneously credited to the account of the recipient. This means that the payment will be taken and received at the same time. This is the day that you will finally see your funds appear in your bank account, and they will become available for you to spend.
Can BACS Payments Take Longer Than 3 Days?
It’s true that BACS is designed to process payments in three working days. However, when you bank with different banks, it can take more than three days for the money to reach your account. This is because the processing of BACS transfers between banks takes longer than making a direct transfer.
It can also take longer if an error is made during the transfer process or if there are any other problems that occur throughout this time.
However, don’t let this make you think that BACS payments cannot be relied upon; most people will receive their payment within three working days of requesting it through BACS.
What Time Does BACS Clear?
It is a common misconception that a BACS payment will always be taken from the sender’s account and reach the recipient’s account at midnight. So, what time does a BACS payment actually clear?
The most common time for a BACS payment to clear is between 1am and 7am. This means that the recipient should see the money appear in their account by the time they’re making their breakfast. However, this isn’t always the case, as BACS payments can be completed at any time of day. In fact, it could take any time up until midnight for the payment to clear.
Does BACS Go In On A Saturday?
You might expect that an automated electronic system would be working 24/7. However, the BACS system is given the weekend off to rest and recover. Therefore, payments are not sent or received at the weekend. So, Saturdays and Sundays are off the cards when it comes to BACS.
To work out when your BACS payment will be made, you’ll need to count three working days from the date that the transfer was initiated. If the transfer was initiated on a Monday, you should expect to receive your money on the Wednesday. However, if the transfer is initiated on a Friday, you won’t receive your money until the Tuesday due to the weekend.
Is BACS Payment Same As Bank Transfer?
Many people use the terms ‘BACS’ and ‘bank transfer’ interchangeably. However, it’s important to note that BACS payments and bank transfers are not the same thing.
The term ‘bank transfer’ simply describes transferring money from one bank account to another. There are three different systems that can be used to do this: Faster Payments, CHAPS or BACS.
A BACS transfer is simply one type of bank transfer, which takes three working days to complete. But it’s important to remember that BACS payments are just one type of transfer that you can do through the bank. In the UK, the Faster Payments service is typically preferred, as it provides an almost instantaneous transfer of funds.
Why Do Companies Still Use BACS?
Although some companies are beginning to implement the Faster Payments service, there are still many businesses that continue to use BACS. There are two main reasons for this.
Firstly, the three day processing time for BACS enables the company time to complete reconciliation. Without this, payments could end up going in and out of the business faster than the finance teams can handle, leaving the company at risk of making mistakes.
Secondly, BACS transfers can be stopped before the funds reach the recipient’s account. In contrast, the Faster Payments service leaves businesses powerless once the transfer has been made, as the transaction cannot be cancelled. This can leave businesses more vulnerable to fraud and human error.
How Safe Is Making Payments Using BACS?
BACS is responsible for clearing and recovering automated payments in the UK since 1968. Since then, it has made over 130 billion transactions and has rarely mismanaged a payment.
The BACS service is managed and monitored by the BACS Payment Scheme Services Limited. This means that BACS is monitored and enforced by the Payment Scheme’s Scheme Rules.
If a bank fails to comply with these rules, it could be fined or even lose its status as a member of the Scheme. However, this hasn’t happened yet because banks are legally obliged to comply with the rules.
In Summary
Whilst BACS payments have been around for a long time and are a comparatively slow way of sending money between accounts, this popular method of bank transfer is likely to be sticking around for many years to come. Although the BACS transfer scheme usually takes around three days to process a payment, it does provide a high level of security and confidence to both the sender and the recipient.
In this article, we have explained the BACS payment scheme in more detail, as well as answering the question ‘how long does a BACS payment take’. Let us know what you think about BACS payments in the comments!