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Introduction to Direct Credits

Bacs Direct Credit is a system which enables businesses, large and small, to make payments by electronic transfer directly into bank or building society accounts. It’s simple, secure, and reliable, and it reduces the time and costs associated with traditional methods of payment processing.

Bacs Direct Credit is increasingly used by businesses operating in a range of sectors for all types of business payments. Most commonly it is used for paying salaries to employees and regular payments to suppliers. There are however a wide variety of other applications where Bacs Direct Credit is the most cost effective solution. These could include pensions, employee expenses, insurance settlements, dividends and refunds.

About Bacs & the NPSO

On 1st May 2018 Bacs Payments Schemes Ltd – known as “Bacs” – became a wholly owned subsidiary of the NPSO.

Learn more about both organisations by clicking below.

Bacs & NPSO - More Information

The Benefits of Direct Credit

Simple

You can submit all transactions in one file

You retain control

You decide when funds will leave your account

Flexible

Can be used for regular and off-one payments

Cheaper than cheques

Eliminates the costs of cheques, stationery and postage

Safer than cash

No need to store currency onsite

Cut down on reconciliation

A single debit from your account so no individual payments to track

Advance Submission

Submit payments up to 30 days in advance

Possibility to Recall Errors

Window to recall payments if needed (with bank approval)

Important Direct Credit Terms

The following are common terms within the area of Direct Credits. Understanding these terms will help you better understand the Scheme itself.

Account-holding bank + -

The bank that holds the account to be credited / debited.

Bacs cycle + -

(see also ‘Processing cycle’). The Bacs ‘operational’ cycle (minimum 3 English bank working days) comprises:

Day 1 (Input day) – Service User submits data to Bacs as per timetable laid down in the Service User Guide – Bacstel-IP.
Day 2 (Processing day) – All data accepted is processed through Bacs and passed onto the Receiving Banks.
Day 3 (Entry day) – The Beneficiary’s account is credited and the funds are debited from the Service User’s account.

Beneficiary + -

The person to whom the Bacs Direct Credit is intended to be paid.

Beneficiary bank + -

A bank receiving payments via Bacs for crediting to the Beneficiary’s account.

Modulus check + -

An arithmetic process to determine if there is a valid link between a sorting code and an account number range, i.e. whether a particular account number could exist at a specified sorting code.

Processing cycle + -

The minimum time taken for a payment to be submitted to Bacs for processing and the time it reaches the destination account. The processing cycle has four stages: arrival, input, processing and entry. Also referred to as the Bacs Cycle

Receiving Bank + -

A bank receiving payments via Bacs for crediting to the Beneficiary’s account

Service user + -

A company, group of companies, charity etc. that is sponsored to use one or more Bacs services. A Service User may also be referred to as a Submitter / Remitter.

Service User Number (SUN) + -

A six-digit number allocated to a Service User to uniquely identify it to Bacs.

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