Bacs Payment Schemes Limited explained

Whether you use Direct Debit or not, you have probably heard of Bacs. But what do Bacs do exactly? What is their role? We explore their history, responsibilities and records in the article below.

Bacs, or Bacs Payment Schemes Limited, are the organisation responsible for the schemes behind the clearing and settlement of automated payments in the UK, including Direct Debit and Bacs Direct Credit. In other words, Bacs offer an electronic system to make payments directly from one bank account to another. Bacs also offer services such as Cash ISA Transfer Service, Biller Update Service, and Current Account Switch Service.

Established in 1968, the organisation provided an alternative to making payments using cheques and cash. Bacs is owned by 16 of the UK’s leading banks and building societies. Initially, Bacs was called Inter Bank Computer Bureau, reflecting their intention to improve the clearing system at that time, by reducing the need for paper documents. In 1971, the name was changed to Bankers’ Automated Clearing Services, and in 1986 it was shortened to Bacs Limited.

Bacs responsibilities

Bacs are responsible for:

• Administering the Scheme’s payment rules and standards, and providing advice on best practice
• Enhancing the quality of clearing, settlement and payment services
• Ensuring compliance with the Bank of England regulatory requirements
• Developing new payment services to meet the needs of corporate customers and consumers.
• BACSTEL vs. BACSTEL-IP

BACSTEL vs. BACSTEL-IP

In 2002, Bacs’ Internet service BACSTEL-IP was introduced. This replaced the telephone dial-up service, BACSTEL, which had been introduced in 1983. Since the introduction of BACSTEL-IP, all software used to make a connection to Bacs has required approval. Connecting to the service can be made only through one of the Bacs Approved Solution Suppliers (BASS) or by using an Approved Bureau.

Bacs Ltd vs. Bacs Payment Schemes Limited (Bacs)

Following the aforementioned developments, Bacs was split into two separate organisations: Bacs Ltd and Bacs Payment Schemes Limited (Bacs). Although the organisations still work closely together, on 12 October 2004, Bacs Ltd became Voca Limited and Bacs Payment Schemes Limited kept the Bacs name.

On 2 July 2007, Voca merged with LINK, which is the operator of the UK ATM network, resulting in a new name, VocaLink. Mastercard acquired VocaLink on 2 May 2017.

VocaLink own the infrastructure on which payment schemes operate, while Bacs maintain the integrity of the current Schemes.

Bacs records

So far, there have been more than 120 billion transactions debited or credited to British bank accounts via Bacs. In 2016, 6.25 billion UK payments were made through this way. On 30 June 3017, Bacs reached a new processing record, with 111.7 transactions in a single day. A further recent record was the value of £52.3 billion of total transactions processed in one day in April 2015.

If you are interested to read more about Bacs payments, browse our article on Bacs payments timings.