Bacs - Getting Started

Overview

UK payments are processed and distributed by a central body called Bacs, a not-for-profit organisation owned by 16 leading banks and building societies.
Bacs operates two primary payment methods, Direct Debit and Bacs Direct Credit (the latter is used to process the vast majority of UK salaries).
Bacs is split into two companies - Bacs Payment Schemes Limited (Bacs), which is responsible for governing the scheme, and VocaLink, which is the technical arm of the partnership.
During an average year, Bacs processes in the region of 6 billion payments, totalling nearly £4 trillion GBP.

A standard Bacs Direct Credit operates on a 3-day cycle. For example, if you want a payment to credit someone's account on Friday, you must submit it, before the deadline, on Wednesday.
On the first day a payment file is submitted to Bacs for processing. Files can be transmitted to Bacs via specialist software, such as Albany ePAY, but they must be received by 22:30 (this window ends earlier for users of internet banking tools).
The payment is processed on the second day, before being simultaneously credited to the recipient's accounts and debited from the originator's account on the third day.
Bacs payments can be scheduled for up to 31 days in advance of the payment date, and can also be recalled as late as day two of the cycle.

Most of Albany's customers are direct submitters. This means that by using a piece of software, such as Albany ePAY, payment files are sent to Bacs and no middleman is involved.
Users login to the software and authorise a file to be sent to Bacs, using a Smart Card or HSM (Hardware Security Module) for security.
The progress of the submissions can be tracked through the software.

An indirect submitter does not send payment information to Bacs and instead relies on a middleman (such as a bureau or bank) to send it on their behalf - Albany ePAY bureau and Albany ePAY online submit indirectly to Bacs.
A Bacs-approved bureau sends payments on behalf of many indirect submitters, but this is not its only role. Bureaux perform many other time-saving tasks, including the calculation of payroll.