When you make a payment online, you have the option to pay via Bacs or bank transfer. But what’s the difference between the two? Continue reading to find out key differences between Bacs and bank transfers.
What is a Bacs payment?
Bacs stands for Bankers’ automated clearing system and it is the electronic way of transferring money from one bank to another within the UK. There are two different types of automated payments, Direct Debit and Direct Credit.
Direct Debit (or ‘pull’ payments) are set up by the customer using a Direct Debit Instruction, giving permission to an organisation to collect money from their account.
Direct Credit (or ‘push’ payments) are commonly used when we think of salary payments, with an organisation depositing funds into a bank account.
Bacs payments are a trusted form of taking payment, from membership fees, monthly instalments and subscriptions, businesses benefit by gaining a recurring revenue stream, enabling better cashflow and credit control. In 2021 alone there were more than 4.6bn Direct Debit transactions, and over 1.9bn Direct Credits.
Is Bacs the same as bank transfer?
Bacs is the same as a bank transfer and both can be used to mean the same thing. Money is transferred in the standard bank to bank way via the internet or phone banking.
The only thing to note is that other types of bank transfers that you may hear about are Faster Payments and CHAPs.
There are no limits to how much can be transferred by Bacs – however, because it’s not instant, it’s best used for recurring payments.
How do businesses use Bacs payments?
Bacs payments can be used for a multitude of purposes, from monthly license fees and regular donations, to salary and payroll – no matter your business sector or size, you can benefit from recurring revenue and a resilient cashflow.
Using Direct Debit, you can collect funds from customers at the same time each month, week or year – saving you hours in manual admin, improving your cashflow and reducing overheads in many cases.
Customers are given peace of mind that they are protected by the Direct Debit Guarantee, which includes a money back guarantee from their bank if a debit is incorrect, or they can cancel a Direct Debit at any time.
Paying an invoice by Bacs vs bank transfer
Bacs is the same as a bank transfer, so if you’re accepting invoice payments via bank transfer, it’s completely free. However because these are potentially one off payments, there’s is a high chance they may be delayed or will require chasing.
Setting up recurring payments via Bacs Direct Debit means that payments are usually made and customers don’t have to remember manually transferring money. Using this payment method, it means there are fewer failed payments as Direct Debits cannot be stolen, lost or expired – unlike credit or debit cards.
Similarly, the success rate of Direct Debit is very high – over 95% typically, whereas using cards this can drop to as low as 80%.
Access PaySuite is a Bacs approved bureau which provides organisations large and small to collect Bacs Direct Debit payments quickly and easily; contact our team today to find out how we can help facilitate your businesses Direct Debit payments!.
