Bankers’ Automated Clearing Services (Bacs) and the Faster Payments Service each handle billions of payments a year in the UK. In the first quarter of 2025, Bacs processed nearly 1.7 billion transactions, and Faster Payments handled over 1.3 billion transactions. Both systems have different strengths, limits, and behaviors, and those differences matter when money needs to move at a certain pace or in a certain pattern.

Below, we compare Bacs vs. Faster Payments, outlining how they work, where they diverge and how to decide which one fits your needs.

What’s in this article?

• What are the main differences between Bacs and Faster Payments?
  
• How do Bacs payments work?
  
• How does Faster Payments work?
  
• What are the pros and cons of Bacs vs. Faster Payments?
  
• How can organizations choose the right payment method?
  
• How Stripe Payments can help
  

What are the main differences between Bacs and Faster Payments?

Bacs and Faster Payments both move money between UK bank accounts. However, they run on different payment infrastructures, with different speeds, rules, and costs. They’re also used for different reasons.

Bacs

Bacs is the standard for UK bulk payments. It’s used to handle payroll, supplier payouts, and direct debits. In fact, eight in ten employees in the UK are paid via Bacs Direct Credit. It’s inexpensive (usually 5 pence to 50 pence per transaction) and built for volume. It’s a batch system: you submit a file, it moves through the system in sequence, and the money lands when expected.

Faster Payments

The Faster Payments Service is the UK’s real-time clearing network. It processes payments individually in seconds. Payments typically arrive nearly instantly, even at night or on weekends. There’s no special setup required: if your bank supports Faster Payments, you can use it. That accessibility makes it ideal for urgent or individual transfers, such as emergency payroll fixes, instant refunds, or last-minute supplier payments. The cost is typically higher per transaction than Bacs, and once sent, the money can’t be recalled.

How do Bacs payments work?

Bacs moves money in batches, on a fixed schedule, through a process that hasn’t changed much in decades.

Here’s how it works:

• Day 1: You submit a Bacs file, usually through your bank, a Bacs bureau, or a payments provider. The file contains a batch of payments, such as payroll, supplier transfers, or customer direct debits.

• Day 2: The file is processed centrally. Transactions are sorted, validated, and passed to receiving banks.

• Day 3: Funds land in recipient accounts, typically early in the morning.

It’s a low-cost, high-volume system designed for predictability. But it requires planning. It usually takes less than three business days from start to finish, but you need to hit submission cutoffs (usually early evening) or the payments can be delayed.

Businesses need a service user number (SUN) and a relationship with a sponsoring bank to send Bacs payments directly. Smaller businesses often use payment providers that handle this on their behalf.

Bacs also includes consumer protections under the Direct Debit Guarantee, which makes it a trusted standard for everything from gym memberships to utility bills.

How does Faster Payments work?

The Faster Payments Service is the UK’s always-on, real-time payment infrastructure. Payments usually clear in seconds, even at night or on weekends. Behind that speed is a system designed for responsiveness.

When you use Faster Payments to send a payment:

1. Your bank validates the request.

2. The payment instruction is routed through the Faster Payments network.

3. The recipient’s bank accepts the payment and immediately credits the funds.

Banks settle what they owe each other either through prefunded accounts or in frequent clearing cycles via the Bank of England.

Nearly all UK banks and fintechs support Faster Payments. If your account is eligible, you can send and receive instantly with no special enrollment needed. The standard cap is £1 million per transaction, but banks often set their own lower thresholds based on account type or risk settings.

Once a Faster Payments transaction is sent, it can’t be changed or recalled. That’s great for urgency, but unforgiving if you send it to the wrong place. It’s ideal for emergency payroll fixes, real-time refunds, last-minute vendor payments, or any scenario where three business days isn’t fast enough.

Faster Payments also powers many open banking flows and account-to-account checkouts. Newer features such as Variable Recurring Payments are evolving to support more use cases, but they’re still mostly used for one-time, push-based payments.

What are the pros and cons of Bacs vs. Faster Payments?

Bacs and Faster Payments have different priorities: timing, scale, cash flow, and control. How your business wants to move money determines which method is best.

Here's how the two systems compare.

Bacs pros

• Bacs payments are very low cost, often a few pence per transaction, which makes them ideal for high-volume use, such as payroll or recurring collections.

• There’s a brief window between submission and settlement, which means errors can be fixed if caught early.

Bacs cons

• Transactions take three business days to clear and don’t run on weekends or holidays. You must submit through a bank, bureau, or provider and pay attention to cutoff times.

• After the processing deadline, transactions move to settlement and can’t be changed. At that point, operators must let the item post and fix issues afterward.

Faster Payments pros

• Payments are live 24 hours a day, 365 days a year. Transfers should clear in seconds with no cutoff window. The fast movement of funds can reduce the need for short-term borrowing or overdrafts.

• You can send individual payments directly from your banking interface or programmatically through an application programming interface (API).

Faster payments cons

• Transactions are typically more expensive than Bacs.

• Transactions are final. Banks can try to recover a payment in cases of fraud or error, but there’s no built-in mechanism to recall it.

How can organizations choose the right payment method?

The right choice between Bacs and Faster Payments depends on timing, volume, and cost sensitivity.

Larger businesses often run payroll and billing via Bacs, while reserving Faster Payments for urgent exceptions. Some finance teams codify this with rules such as “default to Bacs unless payment is under £x and needs to clear today.”

When to use Bacs:

• You’re running payroll on a predictable schedule. Bacs is built for scale and repeatability.

• You’re collecting recurring payments such as subscriptions or invoices. Bacs Direct Debit is low-cost and comes with customer protection.

• You’re paying suppliers in batches, especially if you can plan a few days ahead. You’ll save on fees, and processing in bulk can speed reconciliation.

When to use Faster Payments:

• You’re sending last-minute corrections, supplier payouts that can’t wait, or refunds you want to issue the same day.

• You need to send funds outside of banking hours. Faster Payments is always on, including nights and weekends.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business accept digital wallet payments online, in person, and around the world.

Stripe Payments can help you:

• Optimise your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 100+ payment methods, including more than a dozen digital wallet payment methods, and Link, a wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Easily track and reconcile digital wallet payments across online and in-person channels.

• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorisation rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.