Bacs payments are a core part of how many UK businesses move money — whether it’s paying staff, settling supplier invoices, or managing scheduled account transfers. It’s a tried-and-tested system that’s been around for decades, offering a low-cost, reliable way to handle regular payments.
Still, it’s not always clear how the process works behind the scenes — or when a Bacs payment is the right tool for the job. Here’s a closer look at what it is, how long it takes, and how it fits into a modern payment setup.
In this guide, we’ll cover:
- Bacs payment meaning
- How do Bacs payments work?
- How to set up Bacs payments
- Pros and cons of Bacs payments
- Bacs timings and costs: What to expect from UK banks
- How Dojo can help
- FAQs
What is Bacs?
A Bacs payment is a bank-to-bank transfer used across the UK for routine business payments. It’s processed through the Bankers’ Automated Clearing Services — a network that handles Direct Debit and Direct Credit.
Rather than moving money instantly, these transfers follow a fixed schedule: instructions are collected, verified, and submitted in batches, typically taking up to three working days to clear. That structure makes Bacs payments a reliable option for handling repeat transfers at scale.
Direct debit
A Direct Debit is a type of Bacs payment that lets businesses collect money from a customer’s bank account, with their permission. It’s ideal for recurring payments like subscriptions, rent, or utility bills.
Once a Direct Debit Instruction is set up, businesses can collect agreed payments on scheduled dates. Customers are protected by the Direct Debit Guarantee, which promises a refund if anything goes wrong. They also have the flexibility to change payment dates or amounts, as long as they give notice.
Direct credit
Direct Credit is the other main Bacs payment type, used by businesses to send money into a bank account. It gives full control to the sender and is often used to manage high-volume scheduled outgoings, from payroll to scheduled reimbursements.
It’s a practical option for managing regular outgoings across SMEs and enterprise businesses.
How do Bacs payments work?
Bacs payments are processed in batches, not instantly. That means payments follow a fixed cycle — instructions are submitted in advance and move through the system in stages before landing in the recipient’s account.
How long does a Bacs payment take?
Standard payments via Bacs take three working days to clear:
- Day one – the payment file is submitted
- Day two – the bank processes the file
- Day three – the funds reach the recipient’s account
Because of this delay, Bacs transfer is best suited to payments that can be planned in advance. This makes it a useful tool for businesses looking to manage cash flow more effectively.
Submission and processing
To start the process, payment details need to be submitted before the daily cut-off (often early afternoon). Businesses can do this directly through their bank or by using Bacs-approved software. The system then verifies, encrypts, and queues the payments for processing.
For example, a business processing payroll might submit its payment file on Tuesday before the bank’s cut-off time. The Bacs system processes the data on Wednesday, and employees receive their wages on Thursday. As long as the timing is right, the process runs automatically, making it easy to coordinate payments across large teams.
How to set up Bacs payments
Requirements for businesses
Setting up Bacs payments is straightforward, but businesses need to meet certain requirements depending on whether they’re submitting payments directly or using a third-party provider.
Bacs Service User Number (SUN)
A key part of setting up payment through Bacs is obtaining a Bacs Service User Number (SUN). This unique number is issued by the bank and is required for submitting payment files directly through the Bacs system. Without it, payments must go through a third-party provider.
Third-party platforms
Businesses that don’t meet the criteria for a SUN — or want a faster setup — can use third-party platforms like GoCardless or Telleroo. These services offer a simpler way to make Bacs payments without managing the infrastructure directly. They’re often used by SMEs looking for flexibility and ease of use – especially when handling payments payable by Bacs without direct access.
How to make a Bacs payment through a bank
- Speak to their bank about eligibility
- Apply for a Bacs Service User Number
- Choose and install Bacs-compatible software
- Complete a test payment to confirm setup
Once approved, payments can be submitted directly or routed through a provider, depending on the business’s setup and can be submitted in bulk.
Pros and cons of Bacs payments
What are the advantages of Bacs?
- Reliable: Bacs payments are a trusted part of the UK’s banking system, used by thousands of businesses every day.
- Low-cost: Compared to real-time transfers, payment through Bacs is more affordable, especially for larger payment runs.
- Scalable: Ideal for recurring payments like payroll, subscriptions, or regular supplier invoices.
- Secure: The Bacs network includes encryption and validation checks to ensure safe transfers and protect sensitive data.
- Widely supported: Payments via Bacs are accepted by all major UK banks and are easy to integrate into existing systems.
What are the disadvantages of Bacs?
- Longer processing times: Payments via Bacs take up to three working days to clear, which means it isn’t suited to urgent transfers.
- Requires planning: Because of the fixed schedule and cut-off times, it’s important to plan submissions in advance.
- Not available 24/7: Bacs only processes on working days, so weekends and bank holidays can cause delays.
- Requires setup: Direct access needs a Service User Number (SUN) and Bacs-compatible software, which might not suit smaller businesses.
Bacs timings and costs: What to expect from UK banks
Most major UK banks follow the same schedule for payments through Bacs: a cut-off time of around 7 pm on business days, and a processing time of three working days. Costs typically range from 5p to 50p per transaction, depending on the account type and volume.
While some banks offer later submission windows online, Bacs payments are only processed on working days — so weekends and holidays can delay clearance.
How Dojo can help
Now you know all there is to know about Bacs payments – including how they work, how long Bacs payments can take, and the pros and cons to consider. And while they’re ideal for scheduled Bacs transfers and recurring costs, many businesses also need faster, more flexible ways to get paid — especially in person or online.
For everything outside the Bacs cycle, we offer tools to keep payments moving. Use payment links to get paid via email or SMS, or set up a secure virtual terminals for phone payments. For businesses with an online presence, our online payments solutions make it easy to accept card payments through websites or apps — all backed by Dojo’s trusted platform.
Whether it’s complementing existing Bacs processes or modernising your full payment setup, we can help you achieve the speed, security, and flexibility to move money your way. For more information on all things business, check out our blog.
