BACs Transfers and Processing Explained

If you are employed or work on a freelance basis, your wage will no doubt be paid directly into your nominated bank account. This is usually done by BACS transfer.BACS, which stands for Bankers Automated Clearing Services, was originally formed back in 1968 to enable banks and building societies to transfer funds between accounts during a time when paper transactions were the most popular.

This horizon has since changed and BACS is now the UK's single service for clearing automated transactions.

Is it Safe?

According to a recent report, since the system was introduced BACS have never misplaced a payment and are globally renowned for the secure delivery of electronic payments.

What is Direct Debit and Direct Credit?

This is simple, a direct debit is what you use, for example, to pay your gas bill, telephone bill or TV licence. It is an agreement set up between you and the company you wish to send money to authorising them to withdraw the appropriate amount directly from your account on a certain date.

Most people have multiple direct debits set up on a current account and they are now the most popular way of keeping in control of day-to-day finances.

In fact, over 75 per cent of UK adults have a minimum of one direct debit set up on their account and an average of 100,000 companies or organisations are currently using direct debits to collect payments.Direct credit is simply the opposite. This usually comes in the form of your monthly wage or pension, and simply allows a company to pay money into your bank account automatically without the need to write a cheque or hand out cash.

Most businesses now use BACS in order to pay their employees.

The Ins and Outs of BACS

Over the years, the Government have put pressure on BACS to facilitate a more competitive environment, and following the publication of a report into the company by the Office of Fair Trading, BACS split into two separate companies towards the end of 2004.BACS Payment Schemes LTD is responsible for overseeing the Direct Debits and Direct Credit transactions and Voca, the new company, is responsible for handling the infrastructure and processing of the transactions.

How Does it Work?

The process is simple, all you are required to have to receive or pay via electronic transaction is a bank account and in order to set it up all you need to do is supply you bank sort code and account number along with the name of the person the account is held by.Many people are concerned about this as a result of the increase in identity theft. However, no fraudster can do anything with these details other than pay money into your account.

A BACS payment can take between three to five working days to clear, whether it is being paid into your account or out of your account.

Remember, BACS very safe and also helps to reduce your carbon footprint because the paperwork involved is very little.

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