Bacs

Bacs is the bulk system for high volume, regular retail payments.<br/><br/>

What it is and what it does:<br/><br/>

• Bacs is the UK’s bulk payment system<br/>
• It is used for credit transfers and Direct Debits<br/>
• The system settles on a multilateral net basis<br/>
• Payments are submitted two days prior to the value date<br/>
• Payments take 2 days to complete<br/>
• Submission 24/7<br/>
• Value limit £20m (Customer), £999m (Government / Bank)<br/><br/>

Operational details:<br/><br/>

Bacs is the bulk system for high volume, regular retail payments. Bacs Payment Schemes Ltd sets the rules for the system. It is open for submission 24 hours a day with a cut-off time of 22:30 two days before settlement on value date. Bacs calculates multilateral net settlement totals and forwards payment files to all participating banks, at which point each bank posts transactions to recipient accounts. Posting and settlement occur at the same time on the same day; two days after payments are submitted.<br/><br/>

Bacs Use Cases<br/><br/>

Regular, scheduled payments are sent via Bacs:<br/><br/>

• Business to Business and Business to Customer<br/>
• Bacs Direct Credits<br/>
• Payroll<br/>
• Pensions<br/>
• Benefits<br/>
• Direct Debits<br/>
• Supplier payments<br/>
• Utility bills<br/>
• Subscriptions<br/><br/>

There are three access models to join Bacs:<br/><br/>

Direct Settling Participant<br/><br/>

• Bank of England settlement account is mandatory<br/>
• Meet operational and technical requirements<br/>
• Be a credit institution<br/>
• Liquidity and risk management tools<br/><br/>

Direct Non-Settling Participant<br/><br/>

• Settlement sponsored by Direct Settling Participant<br/>
• Connects directly to Bacs infrastructure<br/>
• Responsibility to meet operational and technical requirements shared with settlement sponsor<br/><br/>

Indirect Participant<br/><br/>

• Commercial relationship between sponsoring Direct Settling Participant and Indirect Participant<br/>
• Not responsible for operational and technical requirements<br/>
• Settlement account at Bank of England not required<br/><br/>

Cost considerations for joining scheme<br/><br/>

High<br/><br/>

• Technology build<br/>
• Assurance costs<br/>
• Operational costs<br/><br/>

Medium<br/><br/>

• Connectivity cost<br/>
• Security e.g. PKI and HSM<br/>
• Transaction costs<br/><br/>

Low<br/><br/>

• Liquidity costs<br/>
• Scheme membership<br/>
• Settlement account cost<br/><br/>

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