BACS
A system for making direct payments between bank accounts.
Bacs was formerly the acronym for Bankers’ Automated Clearing Services, but now refers to Bacs Payment Schemes Ltd. This is the organisation responsible for the schemes behind the clearing and settlement of the UK automated payment methods Direct Debit and Bacs Direct Credit, and which also provides managed services for third parties.
A short history of Bacs
Bacs has come a long way since the introduction of the electronic transfer of funds between banks in 1968, conceived as a solution for avoiding paper documents. Six billion UK payments were made through the Bacs system in 2015, with a total combined value of more than £4.4 trillion. Bacs Payment Schemes Ltd itself is a membership organisation consisting of many of the UK’s leading banks and building societies such as the Bank of England, Bank of Scotland and Barclays.Practical Application Example
“
Possibly the best-known type of bank-to-bank payment through the Bacs system is Direct Debit, which provides a simple and cost-effective means of taking recurring and one-off payments where there isn’t a need for same-day payment. A Direct Debit is an instruction that a customer makes to a bank that authorises an organisation to collect payments from their account, subject to the customer being given advance notice of the payment amounts and dates. ”
