Payment systems

Payments are an integral part of everyday life in the UK. We all buy and sell goods and products online and offline, pay and receive salaries, pensions, and benefits, settle bills and invoices, give and receive gifts – and so much more.

In the UK there are a range of payment systems, which perform a vital role in ensuring that funds move securely, and efficiently, for the benefit of all those who use them.

These critical national infrastructure work silently in the background and, while the services they power touch the lives of millions of us each and every day, most of us don’t notice them.

Pay.UK operates the UK’s national retail payment systems; Bacs, including Direct Debit, Faster Payments, and the Image Clearing System, the digital way to pay and clear cheques. In 2020 alone, these systems processed a record 9.5 billion transactions, and you can find out more about them below:

The Bacs Payment System is used to process Bacs Direct Credits, widely used to pay salaries, benefits, dividends and supplier payments directly into bank accounts, and Direct Debits, which automate the collection of regular payments, the preferred method for many UK bill payments.

More than 140 billion transactions have been debited or credited to British bank accounts via Bacs since its inception in 1968 and, in 2020 alone, the payment system facilitated 6.5 billion payments, at a value of £4.9 trillion.This included over 4.5 billion Direct Debits, a new annual record and represented the 50th straight year of growth for the payment method which celebrated its half century in 2020.

With over 78.5 billion transactions made this way over the last five decades, today the popular payment method is used for a wide range of outgoings, spanning mobile phone bills, broadband bundles, dual fuel, water, council bills, subscriptions, half a dozen different types of insurance, and even holidays.

On its busiest day, at the end of November 2019, the number of transactions processed by the Bacs system reached a new high of 124,000,000.

Learn more about the Bacs Payment System.

The Faster Payment System is a Financial Markets Infrastructure (FMI) providing UK bank, building society and non-bank payment service provider’s customers with real time, 24×7, account-to-account funds transfers. Over 400 financial institutions offer Faster Payments, making it available to the vast majority of current account holders in the UK.

Faster Payment System includes:

  • Direct Corporate Access – Which enables file submission of payments using the same software as Bacstel-IP to enable business customers to send payments quickly and securely, 24 hours a day
  • File Input Module – Which enables file-based payments to be submitted direct to central infrastructure by payment service providers
  • Forward dated payments – Which enables mobile, internet, telephone and file-delivered payments for a current or future date
  • Single immediate payments – Enables mobile, internet and telephone payments to move quickly and securely, almost at the touch of a button, 24 hours a day
  • Standing order payments – Available Mon-Fri (excluding Bank Holidays), these are regular payments processed by payment service providers  on behalf of their customers; with the payment service provider submitting payments on the due date (or next business day) between 00:01 and 06:00 – so that beneficiary is credited early in the day.

Learn more about the Faster Payment System.

Cheque imaging is the process that enables images of cheques to be exchanged between banks and building societies, through the Image Clearing System, for clearing and payment across the UK, including Northern Ireland.

ICS allows a customer to either pay-in normally at their branch or send in an image of the cheque (via a mobile banking app) to their bank (if their bank offers that service). The bank then either creates its own cheque image or uses the customer’s, and sends the image via ICS to the paying bank, for security, administrative and sufficient balance checks, after which the paying bank sends the money to the payee bank. Typically, the ICS has enabled cheque processing to reduce from 6 days to be absolutely certain that the cheque won’t bounce to 23.59 the next weekday after paying in a cheque.

Learn more about the Image Clearing System.

Access to payment systems

Access to the UK’s payment systems is vital for organisations providing the payment services their customers need. To help meet this need, and in collaboration with the UK’s primary payment schemes, we have created a website to serve as an online focal point for any organisation that needs to access payment systems.

The Access to Payment Systems website is designed to improve the disclosure and transparency of information for participants in payment systems, enabling greater visibility and access to information across payment systems. It presents links to individual payment systems and helps payment service providers (PSPs) to make comparisons across both direct and indirect access offerings, and between different sponsor banks.

The Access to Payment Systems website also hosts the Code of Conduct for Indirect Access Providers.

This voluntary Code of Conduct was developed in response to the findings of the Payment Systems Regulator’s (PSR) consultation paper CP14, “A New Regulatory Framework for Payment Systems in the UK”. The findings were published in March 2015 in the form of the PSR’s policy statement PS15/1 and its annexes, which recommended the development of a Code of Conduct to increase confidence in the supply of Indirect Access and lead to improved outcomes for service users.

Responses to this Consultation were collated by the Code Administrator and shared with the PSR so that it could consider the responses alongside its market review into indirect access. For further information on the Consultation please visit the Consultation page.

Pay.UK acts as the administrator for the Access to Payments website, and code of conduct, providing information on the payment systems that are part of the Pay.UK (Bacs, Image Clearing and Faster Payments), as well as CHAPS and LINK.

Access to UK payment systems for non-bank payment service providers

Access to UK payment systems for non-bank payment service providers information pack is a guide for authorised payment and e-money institution payment service providers (non-bank PSPs) that would like to access the UK’s interbank payment schemes directly, as opposed to via a sponsor bank. It outlines the framework by which non-bank PSPs can apply to open a settlement account at the Bank of England (the Bank), in order to become a direct participant of a payment system. You can download the document below.