Credit payments

In 2000, there were 1,100,000,000 direct credit payments made through BACS

When people have bills to pay on a regular basis, e.g. every month, these can be paid using direct debits and standing orders. When you complete a direct debit form, it gives the bank the authority to make regular payments direct from your bank account to the organisation you specify.

In the case of standing orders, the amount the customer pays is fixed. Direct debits are more flexible as the amounts taken from the individual's account can change. For example, a direct debit would be better for paying a telephone bill as the amount varies each month. When the amount varies, the customer is always notified at least ten days before the money is taken from the bank account.

Direct debits are popular with customers because paying bills automatically saves the time and trouble of sending a cheque or paying cash Businesses receiving the money also benefit, as they know exactly when the money is transferred into their account.

Day 1

• Gas board prepares list of names, bank accounts, and amounts
• Passes to BACS by computer

Day 2

• BACS processes data and sends details to all banks

Day 3

• Gas board's Account credited:
• Money taken from customer accounts
  • Customer 1 — debited:
    • money removed from account
  • Customer 2 — debited:
    • money removed from account
  • Customer 3 — debited:
    • money removed from account

Direct debits are used to pay subscriptions, household bills (gas, electricity, oil, water rates, council tax), rent, insurance premiums, loan and rental payments

© LEV