BACS - Bankers Automated Clearing Services


The Bankers Automated Clearing Service (BACS) was formed in 1971, mainly to provide a central clearing function for bulk automated payments.

Here we learn about BACS and its associated companies...

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BACS History

Throughout the 1960s, all transactions between banks were entirely paper based. However, in 1968 the Inter-Bank Computer Bureau set up a secure, streamlined method of handling payments, which reduced processing time and human errors.

In 1971 the company name was changed to the Bankers Automated Clearing Services. The function of  the BACS company was primarily to provide a central clearing function for bulk automated payments.

In 1985 it shortened its name to BACS Limited and expanded its membership to include building societies.

On 1st December 2003, following a review, BACS split into two companies BACS Ltd and BACS Payment Schemes Limited (BPSL).

Each company could then focus on its specialist area...

  • BPSL on governing the rules of the scheme.

  • BACS Ltd on processing the payments and developing the technology for future enhancements. On 12th October 2004, BACS Ltd was re-named Voca.

BACS Payment Schemes Ltd

Is a membership based (not for profit) business dedicated to enhancing the integrity of the payment schemes.

"BACS Payment Schemes Limited is a membership-based industry body whose role is to develop, enhance and promote the use and integrity of automated payment and payment-related services. It promotes best practice amongst those companies who offer payment services and is responsible for the associated payment clearing and settlement services."

The BPSL members are made up of the twelve following member banks and building societies:

  • Abbey

  • Alliance and Leicester

  • Bank of England

  • Bank of Scotland (HBOS)

  • Barclays Bank

  • Clydesdale Bank (represented by National Australia Group)

  • The Co-operative Bank

  • Coutts & Co (represented by Royal Bank of Scotland Group)

  • HSBC Bank

  • Lloyds TSB Bank

  • Nationwide Building Society

  • Natwest Bank (represented by Royal Bank of Scotland Group)

  • Northern Rock

  • The Royal Bank of Scotland

Northern Rock was Nationalised on 22 April 2008

BACS Payments

BACS cycle

The three day cycle (minimum three English bank working days) taken for a payment instruction to be submitted to BACS for processing and the time it reaches the destination account. The processing cycle has the following stages: arrival, input, processing and entry.

Direct Debit
Direct Debit
"A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying amounts from their account, as long as the customer has been given advance notice of the collection amounts and dates."

"Conceived back in the 1960s, Direct Debit has become a household name with over 70% of the population using the service."

Direct Credit

"Direct Credit - A simple secure and reliable service, which enables large and small organisations to make payments by electronic transfer directly into bank or building society accounts."

"Over 90% of people are currently paid using the BACS Direct Credit salary service."

Note: In the 21st century, many pensions and benefits are paid via Direct Credit.

"On 1 April 2003, the official start of the direct payment programme, the only full current account banking service available through post offices was for Alliance and Leicester customers. Alliance and Leicester current account holders could (and can), using their bank card, withdraw cash, deposit cash and make balance enquiries."

"Since April 2003, the way your State Pension is paid has changed. Instead of using pension books, giro cheques or payable orders, your money is paid straight into an account of your choice. You receive the same amount at the usual time."


"Clearing House Automated Payments System. A system providing same day settlement between financial institutions for low volume, high value transactions."


BACS Limited changed its name to Voca Limited on 12th October 2004 and is the commercial company that physically processes the Direct Debit and Direct Credit payments, and maintains the payment network.
The LINK ATM Scheme determines the rules for all participants in the cash machine network and sets standards for signage, encryption, messaging, and security.
VocaLink was formed in July 2007 from the merger of Voca and LINK.
VocaLink's Real-Time Platform facilitates the UK's Faster Payments Service, which was launched on 27th May 2008.
VocaLink provides the physical switch(es) for transactions while the LINK ATM Scheme sets the rules, practices and procedures.

See also BACS History above.

The early days of BACS used advanced technology for the time, but were a far cry from the electronic processing of today.

1975 saw the introduction powerful transaction processors, CEFT to make this process even faster and secure. Data for CEFT was being read by large magnetic tapes at this point, delivered to BACS' Edgware location by an endless stream of motorcycle couriers.

During the 1990s, the following services were rolled out to major users of BACS:

  • Automated Direct Debit Amendment and cancellation Service (ADDACS)

  • Advice of Wrong Account for Automated Credits Service (AWACS)

  • Industry Sort Code Directory (ISCD)

  • Transfer of Direct Debit and Standing Orders (TODDASO) often referred to as the Switching bank account service in the press

  • Automated Direct Debit Instruction Service (AUDDIS)

  • Paperless Direct Debit

  • Euro payment transaction services.

Voca is responsible for promoting the Direct Debit service to the general public, consumers, and businesses, through the use timely marketing and campaigns.


In October 2005, Immediate Payments Ltd was formed as a joint venture between Voca and LINK to establish the UK's 'Faster Payment Service' to supplement BACS transfers.


Society for Worldwide Interbank Financial Telecommunication
SWIFT is the industry-owned cooperative supplying secure messaging services and interface software to over 7,000 financial institutions in 198 countries. SWIFT provides messaging services to banks, broker/dealers and investment managers, as well as to market infrastructures in payments, treasury, securities and trade. These services help customers reduce costs, improve automation and manage risk.

At the beginning of the 1970s instructions and messages between banks was still sent via telex, which was based on semi-automated electric typewriters (teleprinters). This was a comparatively slow service and not suited to handling the volume of transactions which a busy bank could generate.

> Working from an office in Brussels, a co-operative representing 239 banks across 15 countries created a vision of a shared worldwide processing link with a common language for international financial transactions. Thus the Society for the Worldwide Interbank Financial Telecommunication or SWIFT was established in 1973.

> On 1st July 1992 an important new service the Interbank File Transfer (IFT) went live to handle a range of bulk data transfers including mass payments, cheque truncation and internal reporting.

> In the 21st century, the SWIFT networking extends across 198 countries.


CREST is the computerised system that transfers gilts, shares and corporate bonds electronically, without using certificates. CREST is not an acronym.
Euroclear Euroclear is the world's premier settlement system for domestic and international securities transactions, covering bonds, equities and investment funds.

CRESTCo, part of the Euroclear group, is the Central Securities Depository (CSD) for the UK and Ireland, and operates the CREST system.


Euroclear was established in 1968 to settle eurobond transactions.

Euroclear Bank, based in Brussels, Belgium, offers a single access point to securities services in over 25 equity markets and over 30 bond markets worldwide.


CREST is the computerised system that transfers gilts, shares and corporate bonds electronically, without using certificates.

In June 1993 a Task Force reported to the Governor of the Bank of England recommending a new cost effective service for UK equity settlements. On 15th July 1996 CREST was inaugarated by the Chancellor of the Exchequer, the Rt Hn Kenneth Clark QC, MP. And on 19th August 1996 CREST settled the first transactions.


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