27 May 2018

Bacs busts 100 million payments a day mark

03 August 2015  |  6882 views  |  6 Source: BACS

A staggering 103 million payments were processed in just one day at the end of July by Bacs Payment Schemes Limited (Bacs), the organisation behind Direct Debit in the UK.

The not-for-profit company has already seen records fall this year, but reached this major milestone on 31 July - the equivalent of 6.65 million payments an hour, or nearly 111,000 every single minute the processing window was open.

The record-breaking figure included 91 million Direct Debits and 12 million Bacs Direct Credits and surpasses the previous daily high of 99.3 million transactions, set in February 2015.

On top of that, Bacs can also announce that the company has processed 110 billion transactions since its inception in 1968. Just to put that figure into context, that’s more than the total number of people to have ever walked the earth!

Making regular payments by Direct Debit has become second nature for millions of consumers, with eight-out-of-ten adults in the UK having at least one Direct Debit and around 71 per cent of household bills paid this way.

The continuing popularity of Direct Debit as a means of managing household income and spreading costs was given a further boost in October 2014, with the Driver and Vehicle Licencing Agency’s (DVLA) launch of Direct Debit as a payment method for vehicle tax. So far, around eight million motorists have taken up the option to pay monthly.

Bacs CEO Michael Chambers said: “It is a testament to the continuing popularity of our products with consumers and businesses alike that, yet again, we are seeing processing records being broken.

“These two new milestones come after a record 2014, in which we processed almost six billion payments, representing the highest level of growth since 2007.”

Comments: (6)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 04 August, 2015, 15:52

Whaaat? During the implementation of FPS at a Top 3 UK bank, the agenda of one meeting was "Death of BACS". The consensus prediction was that FPS would kill BACS three years after its go live in 2008. So many years later, BACS breaks transaction volume records. Hmmm, this just goes to show that these "A will kill B" and "C will disrupt D" kind of dire predictions rarely come true in financial services.

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James Piggot
James Piggot - Finastra - London 13 August, 2015, 12:03

I don't think FPS provides direct debits and that makes up 90% of the BACS payments?

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Chris Dunne
Chris Dunne - VocaLink Limited - London 13 August, 2015, 16:32

@james Yes you're right - FPS is credits only.  In the year to June 2015, Bacs volumes were 3.8 billion Direct Debits (up 5% on last year) and 2.1 billion Direct Credits (0% change on last year).  FPS voume was 1.2 billion (up 13% on last year).  

So whilst DD volumes are still rising, DC volumes are flat and some of this may be down to the rise in FPS volumes; however most of the FPS rise is due to displaced cash and cheque transactions (imho)

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 August, 2015, 16:49

@JamesP: You're right, FPS didn't provide DD then. Thanks to @ChrisD, we have it from the horse's mouth that it still doesn't. But, you know how it is with disruptions - people expected FPS to do everything except make coffee! On a more serious note, because money left the payor's account on T-3 in the case of BACS and T-0 in the case of FPS, the expectation was that payors would convert their BACS DD mandates to FPS DC - I forget what the standing instruction equivalent was called in FPS - so that they could hold on to their money for a couple more days. Looks like that hasn't happened.

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Chris Dunne
Chris Dunne - VocaLink Limited - London 13 August, 2015, 17:00

@Ketharaman: Standing Orders used to be processed in Bacs, but as they generated float they had to migrate to FPS by January 2012 to comply with PSD.  These Standing Orders represent about 0.3 billion of the overall FPS total, and these grow at 4% a year.  The bulk of FPS transactions are Single Immediate Payments (ie one-off payments initiated by customers) and these are growing at 20% a year.  These are mainly substitutes for cash and cheques, although small employers are increasingly using it to pay staff, particularly if they work variable hours.

There is no float in Bacs DD or DC.  Although it is a three-day cycle, the debits and credits are applied simultaneously on Day 3. 

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 August, 2015, 11:38

TY @ChrisD for the clarifications and the figures. I received my June 2008, if not even May 2008, salary via FPS. I remember my company's CFO telling me that the company switched from BACS to FPS to save on float. Now that you clarify that there's no float in BACS, I guess the switch was triggered by some other reason. I assumed that the same reason would drive every company to do the same. Now, if the mainstream market still uses BACS for payroll, as your comment about small employers seems to imply, I guess I'm guilty of the same mistake made by most fintech professionals who assume that their personal preferences and experiences would automatically spread like wild fire to the overall market!

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