Why a BACS payment?

Banking Personal Banking
1

I’ve been offered some compensation today & I have been told it will be received in 3-5 working days via BACS.

It’s the same at work, sometimes £3 worth of expenses are paid via BACS rather than FP.

For those in the know, I wanted to know why this payment is preferred in many instances? Genuinely intrigued!

Is there a cost element? Otherwise, why not let people have access to funds sooner?

P. S. Also when you read online, some places say it is a defined cycle of 3 working days …for anyone who knows, given it is working days, what could cause it to take up to 5 if its a 3 day cycle?

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My guess would be that the ERP systems aren’t plugging directly in to a bank account which could then trigger the faster payment, but are just sending a file to a third party on a nightly basis.

I also then assume, if a mistake has been made, it would be easier to recall a BACS payment while it is still ‘processing’ than a faster payment that would already have hit the recipients bank account?

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I always thought it was so the company could earn a few more days interest before it’s sent!! :joy:

4

We send BACS rather then faster payment as it costs our business more to send payments that way and can send batch of payments as well.

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Agreed. I assume at a lot of places you need access to online banking to make a faster payment,which obviously very very few have.

While BACS payments can probably be initiated from their own software.

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The cycle can be delayed if the payment needs to be redirected due to the referenced account being CASSed or something like that. I believe there is also provision for it to take longer for anti-fraud checks, but a decision must be made by 1pm on the second working day on whether to pay it or delay it. This is how things like Monzo’s Get Paid Early can work (the decision has been made already by the time they let you get paid early).

They may also be trying to factor in bank holidays by saying 5 days, or simply covering themselves for not setting it up straight away. For example, if I set up the payment beyond the cut-off time for today, then tomorrow counts as “day 1” and not day 2.

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May I ask how you incur charges for FP?

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A lot of businesses don’t have access to online banking?

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I did think some of it would be to buy them initial processing time but interesting points r.e fraud and caws

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I thought that initially, but I think what was meant was that only certain people in the business (in the finance office, etc) would actually have direct access to online banking.

Whereas potentially more employees may have access to the payroll software, which could raise BACS payments up to a certain amount automatically via an integration with the bank account? This might run to HR people dealing with reimbursing expenses, for example, but they would have no ability to access the bank account directly to make a faster payment?

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No. I mean there are only a very small number of people in the company with access to online banking. Likely noone from customer service, or whoever is authorising the compensation.

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12

That’s what I thought, having read your comment twice!

14

This makes a lot of sense in this context

I work for a very small organisation where I can request the payment type from an accountant (for a customer, not myself!) , but obviously very different depending on the organisation

15

I would hazard a guess that you are probably trusted with more autonomy, given the size of the organisation, than is typical.

Most people would probably not be able to request payment type, I would imagine.

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Yeah there is a big of that, I’m in a managerial position in a relatively small organisation…its also that we do deal with deprived/vulnerable individuals who can’t wait 3 days sometimes if I’ve taken a payment incorrectly etc

It’s interesting how you can have a relatively narrow view without realising! This has been quite insightful, cheers guys!

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17

Lots of business accounts charge 10-30p per transaction via Faster Payments.

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It’s down to what HsBC charge the business I work for online banking for making payments using faster payment compared to BACS. I do work in finance.

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We pay customers by BACS, however if they contact us and fit certain criteria for an early payment, we can recall the BACS payment up until a certain date before it’s due and then create a faster payment instead.

Similarly if we’ve issued a payment and notify the customer and they query it then provide new evidence, recall that BACS payment and reissue updated new payment via Faster payment.

Can also recall any payments where discover they’re not allowed that cash for whatever reason.

It has its uses in these cases as you’ve more control over that money crediting. Can fix any issues before the actual payment date etc etc

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Yep @anon96726526 that’s the good thing as you can recall a single BACS from a batch that is due to go out as you have a couple days before it debuts the account.

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If our system can’t recall the payment as it’s passed a certain date. We’ve one final option of passing the payment to another team who can recall it so long as it’s not too late at the banks end. Can’t fully recall the cut off for that though, brains going to sleep now.

Much how Monzo do the pay early, they know once it’s gotten to a certain time, that BACS payment can’t be recalled anymore.