| Bankers' Automated Clearing Services, or BACS, | | | | transaction every year. That's a lot of processing, |
| was invented by Dennis Gladwell. The first BACS | | | | and while change is inevitable eventually, it won't |
| payments became available in 1968 through his | | | | be happening overnight. The system is currently |
| Inter-Bank Computer Bureau, which was set up in | | | | owned by 15 of the leading banks and building |
| the UK as a scheme for processing financial | | | | societies throughout the UK and Europe. It has |
| transactions electronically between banks. | | | | been responsible for the vast majority of |
| By 1971 the name of the company that operated | | | | automated electronic payments for over 40 |
| the service was, Bankers Automated Clearing | | | | years. That's quite a record! |
| Services Limited. It took some 14 years until 1985 | | | | The BACS payments system is particularly |
| before the company shortened its name to BACS | | | | convenient for businesses. They can use it to |
| Limited, hence the BACS payments system. Since | | | | make payments to their employees and their |
| then the company has undergone some further | | | | suppliers. It negates the need for writing out |
| changes of set up, but the familiar name of BACS | | | | cheques, or making a special journey to the bank |
| remains. | | | | for cash. Once accepted by the BACS payments |
| BACS payments were a considerable innovation | | | | system, a company can use it to make just |
| when they first became available, but by now | | | | about any payment they choose to make. |
| most of us have used the system, though we | | | | The BACS payment system also provides full |
| may not be aware that we have. If you have a | | | | reporting and detailed analysis of all payments |
| direct debit set up with your bank account, then | | | | made. It confirms that payments have been |
| you are using BACS payments. | | | | made and provides a high level of peace of mind |
| The BACS payments system does have its | | | | for the busy company owner whose time is |
| drawbacks though and has been criticised by | | | | better spent doing other things. Cash flow and |
| consumer groups as being inefficient. The three | | | | therefore financial control can be improved |
| days that it takes for money transfers to clear is | | | | through the efficiency of the BACS payments |
| the main problem. Many people can't understand | | | | scheme as it becomes so easy to see where the |
| how an electronic system has to take so long. | | | | money is going. |
| When compared to some of the other electronic | | | | An interesting statistic that shows the BACS |
| payments systems, such as those in use in | | | | payments system in a very positive light is the |
| Scandinavia, for example, the BACS payments | | | | fact that in 2007, 90% of all the UK's employees |
| system begins to show its age. Those systems | | | | received their wages and salaries through BACS |
| routinely transfer money between bank accounts | | | | transfer. And for the employees concerned there |
| in a matter of hours. However, the BACS | | | | was no thought of the possibility of bounced |
| payments system still has much going for it and is | | | | cheques; they knew their wages would be lodged |
| showing no obvious signs of weakening. | | | | in their bank accounts on time every time. |
| BACS payments account for some 5.5 billion | | | | |