What is the difference between BACS and Faster Payments?

UPDATE: For more information about Faster Payments and BACS, see our new Cashless Payment guide

Whether you’re receiving money into your bank account from an employer or an individual or sending money to another person, you can do this electronically and efficiently via Online Account Management or your App. But it’s important to know the different methods that can be used and the timescales involved.

Here we’ll explain the difference between BACS and a Faster Payment and how they’ll make managing your money simpler.

BACS payment

BACS is the company that runs a number of important parts of the payments systems in the UK. It runs the Direct Debit system and also provides BACS Direct Credits. BACS Direct Credits were designed by the UK banking industry to enable organisations to make large numbers of payments directly into people’s bank or building society accounts.

BACS replaced the need to make payments using cheques and cash, making it quicker and more secure. Employers and government departments usually use BACS to pay wages and benefits. BACS Direct Credits are not used by individuals to send money.

It normally takes three working days for a BACS Direct Credit to arrive in the receiving account. For example, if a BACS payment is made to you on a Monday, it should arrive in your account early on the Wednesday morning. In order for a company or employer to set up a BACS transfer, they need your account number, the name the account is held in and the sort code.

BACS payments are only credited to accounts Monday to Friday and arrive once a day, usually very early in the morning. If your wages are due on a Saturday or Sunday, it is your employer’s choice whether to send the BACS payment early so that it arrives on the Friday or to delay it so it arrives on the Monday. However, employers will generally ensure the credit is earlier rather than later.

Faster Payments

Faster Payments are, as the name suggests, faster than BACS. The banking industry introduced Faster Payments in 2008 to let people transfer money in real-time from one UK account to another, but some employers also use them to pay wages. With Faster Payments, money can be sent from one account to another within minutes. They’re usually instant but in some cases the payment can take up to two hours.

Again, the most important information you’ll need to make this type of transfer is the account number and sort code of the person you’re paying. You’ll also have to provide a reference so that whoever is receiving money can identify the payment more easily.

Let’s take a look at the main advantages of Faster Payments.

• They normally happen instantly – making them much quicker than BACS.
• There’s no charge for Faster Payments.
• The Faster Payments system is available 24/7.

The main drawback of the Faster Payments Scheme is that it allows providers to set the maximum amount sent in any single payment to be capped at any level up to £250,000. Most providers, including thinkmoney will have various security measures in place to assess payments irrespective of the cap.

Keeping your transfers safe and secure

Whether you are sending a Faster Payment or giving somebody your details so they can send you money, it’s very important to ensure that the sort code and account number are correct. It may not be possible to recover money sent to the wrong account.