Bacs Payment Schemes Limited (Bacs), previously known as Bankers' Automated Clearing System, is responsible for the clearing and settlement of UK automated direct debit and Bacs Direct Credit and the provision of third-party services. Bacs became a subsidiary of Pay.UK (formerly known as New Payment System Operator (NPSO)) on 1 May 2018, and responsibility for direct debit, Bacs Direct Credit, the Current Account Switch Service, Cash ISA Transfer Service and the Industry Sort Code Directory was given to Pay.UK.
More than 140 billion transactions have been debited or credited to British bank accounts via Bacs since its inception; in 2019, 6.5 billion UK payments, worth £5 trillion, were made. At the end of November 2019, the number of single-day transactions processed by Bacs reached a high of 124 million; a monthly record was set in August 2018, when 580 million payments were processed.
History
The Electronics Sub-Committee of the Committee of London Clearing Bankers was formed in the late 1950s to consider the automation of cheque-clearing. The committee set up a New Services Working Party in 1965 to examine the possibility of exchanging data between banks without using paperspecifically, the automated exchange of standing order credits. This led to the creation of the Inter-Bank Computer Bureau (IBCB) within the Bankers Clearing House, which was tasked with setting up a computer facility.
The electronic transfer of funds began in 1968 in BCH's (Bankers Clearing House) computer room. A new location was found in 1971: a converted warehouse in Edgware on a site used by Amy Johnson and Jim Mollison on their solo flights to Australia. Plans for a purpose-built computer centre were drawn up early that year. The building was completed in June 1972, with ICL equipment delivered in July. Full computer service was established after the relocation in October 1972.
The IBCB was initially controlled by BCH's Systems and Development Committee before it was controlled by its own managing committee. The committee decided that a separate limited company should be created, and Bankers Automated Clearing Services was registered on 10 September 1971. Adopting BACS as its name, the company registered the acronym as a trademark on 1 December 1971. It was renamed BACS Limited on 20 March 1986.
On 1 December 2003, Bacs Payment Schemes Limited (BPSL) was split from Bacs Limited as a nonprofit organisation with members of the banking industry promoting the use of (and setting the rules for) automated-payment schemes and Bacs Limited owning the infrastructure to operate them. Bacs Limited used that name for one year, becoming Voca Limited on 12 October 2004. Voca Limited merged with the UK national switch provider LINK Interchange Network on 2 July 2007, and became Vocalink. Vocalink owns the infrastructure on which payment schemes operate, and BPSL maintains the schemes.
Bacs users began moving from the telephone dial-up BACSTEL service (introduced in 1983 to replace magnetic media) to BACSTEL-IP, a faster, more secure Internet-based service, in 2003. All Bacs users, including businesses that make payments to their suppliers or operate their staff payroll electronically, were required to move to BACSTEL-IP by the end of December 2005 or return to using cheques. When BACSTEL-IP was introduced, all software used to make a connection to Bacs required approval; it is only possible to connect with software from the list of Bacs Approved Solution Suppliers (BASS) or an approved bureau.
New service users were required to use AUDDIS, a more efficient system for organizations to send new direct-debit instructions to their customers' bank or building society electronically instead of on paper, in 2008. That year, annual direct-debit volume surpassed three billion; volumee reached 3.5 billion by 2013, with 100 billion payments processed since 1968.
Further developments
Bacs processed a record 5.8 billion transactions in 2014 for a total of £4.4 trillion, including 3.6 billion direct debits. The number of payments passing through the Bacs system topped six billion for the first time the following year, with a value of £4.6 trillion. The number of direct debits processed in 2015 increased by 239 million over the 2014 total.
A record 103 million transactions were processed in a single July 2015 day. That year, it was announced that the number of payments handled by Bacs since 1968 had exceeded 110 billion.