UK automated payments go from strength-to-strength

8 January 2007

BACS reviews achievements since 2003 Governance split

Three years on from the governance review that separated BACS and Voca into two distinct organisations, BACS – the not-for-profit industry body responsible for Direct Debit and BACS Direct Credit has announced figures that show its payment schemes are going from strength to strength.

Since the start of 2004, automated payment usage has increased significantly across the UK. In that time, over 14.5 billion transactions have been debited or credited to British bank accounts via BACS. Ninety per cent of salaries are now paid via BACS Direct Credit, with four million wages processed every week and 21 million salary payments transferred each month. The number of UK adults using Direct Debit has also reached an all time high – some 35 million adults now have at least one Direct Debit commitment.

Michael Chambers, managing director of BACS and a leading authority on UK automated payments, reveals more and takes a look back at some of the company’s most recent highlights.

Achievements from 2003 to 2006

Launch of BACSTEL-IP – a unique Internet Protocol (IP) channel used by more than 100,000 UK corporates to submit their BACS transactions.

Extension of BACS membership base to include Danske Bank – Denmark’s largest bank and BACS’ first non-UK member.

The Department for Work & Pensions’ conversion to using BACS Direct Credit for nearly all benefit and pension payments.

Establishing the BACS Affiliates group – a communication forum for corporates, banks and government departments that use BACS services.

Increased usage of automated payment methods across the UK – 74 per cent of UK adults now have at least one Direct Debit commitment.

Overall volume uplift equating to just under 5.4 billion items processed for the year to date, plus peak day processing reaching 80 million items.

“At the time of the governance split, BACS was given a clear remit to manage and enhance the integrity of the payment schemes it runs. As an unbiased representative of the UK payment services industry, this gave us a great opportunity to assess existing payment processes and procedures and take a look at the rules and legal structures governing how decisions are made.

“A crucial challenge facing the new company was to ensure that the right technologies and systems were put in place to provide a secure and reliable funds transfer service, capable of meeting future growth needs.”

“In this respect, our single largest success has been the completion of the migration to BACSTEL-IP - a world class online submission channel that takes straight-through-processing to the next level. The migration, which was the largest ever electronic banking project of its kind, concluded in January 2006 and has provided more than 100,000 users with faster, more secure services, together with the ability to track and view payment files at any time and from anywhere.”

“The number of BACS transactions has also grown year-on-year. While much of this growth has been organic, a large part can be attributed to the Department for Work & Pensions’ (DWP) increased use of BACS Direct Credit for regular benefit payments. The DWP is our most voluminous user, submitting hundreds of millions of transactions each year.”

“On the governance front, 2006 saw the creation of the BACS Affiliate Interest Group (AIG) – a communication forum for payment scheme users and stakeholders. The AIG, which already has a broad membership base across corporate users, financial institutions, government departments and technology providers, regularly meets to have informed discussions about the BACS service and influence wider issues impacting on the payments market.”

“As we move into 2007, the UK payments industry is entering an exciting phase. For the last two years, BACS has been playing a central role in the European Payment Council’s SEPA Direct Debit Working Group, developing the new Euro-denominated scheme and comparing its merits with BACS’ tried and tested practices. Working with our member banks, BACS Affiliates and originators of Direct Debit and BACS Direct Credit transactions, we look forward to driving the continued development of automated payments through a number of exciting projects we have in the pipeline.”

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