The Bankers' Automated Clearing System (BACS) is a long-standing electronic payment system in the United Kingdom used to transfer money directly between bank accounts. BACS is cheap and reliable, making it ideal for bulk payments like employee payrolls and is widely integrated into business and government systems.

This guide provides an overview of the BACS payment rail integration on the Pismo platform for UK clients. BACS is supported as an additional UK payment rail alongside Faster Payment Systems (FPS).

Key aspects

• Usage—Used primarily for regular, predictable, and high-volume payments rather than urgent, one-off, or high-value payments.
• Cost-effective—It is often cheaper than other methods, such as cheques or CHAPS.
• Availability—Accessible via most UK banks and building societies.

Bank-to-bank transfers

BACS bank-to-bank transfers:

• Direct credit deposits—Funds are sent from an originator’s bank account to a beneficiary’s bank account. Direct credits are typically used for payroll, pensions, refunds, supplier payments, and benefits disbursement.
  • Outbound direct credit—A bank or platform initiates a direct credit on a client's behalf, instructing BACS to push funds to beneficiary accounts. Commonly used for bulk payments such as salaries.
  • Inbound direct credit—The bank or platform, acting on the beneficiary's behalf, receives a direct credit. In this flow, the system processes incoming BACS files/messages and credits the beneficiary account after scheme validation and settlement.
• Direct debits —An organization (originator) collects funds from a payer’s bank account. Widely used for recurring payments such as utilities, subscriptions, insurance premiums, and loan repayments.
  • Outbound direct debit—An originating bank or platform submits a direct debit collection request on a user's behalf, instructing BACS to collect funds from payer accounts.
  • Inbound direct debit—A originating bank or platform submits a direct debit collection request on a user's behalf, instructing BACS to collect funds from payer accounts.

Payment processing

Payments are processed in batches, not instantly, and typically follow a 3 working-day cycle:

• Day 1—Payment is submitted
• Day 2—Banks process transaction
• Day 3—Funds are deposited in recipient's account

Getting started—create and register Pismo accounts

Before participating in BACS transactions, clients need to create Pismo accounts and register them as UK accounts:

1. Create account application
2. Register UK bank account— Validates bank account details and ensures BACS scheme eligibility. Pismo registers the account with the provider and receives activation confirmation.

Note: If there is any error on the provider's end while creating the account, a Provider notification generated event notifies the customer that while Pismo successfully created the bank account it failed at the provider's end.

BACS API endpoints

The main BACS API endpoint is Send BACS direct credit outbound payment

curl --request POST \
     --url https://sandbox.pismolabs.io/bacs/v1/payments/bacs/directcredit/out \
     --header 'accept: application/json' \
     --header 'content-type: application/json' \
     --data '
{
  "reference": "Weekly money for Mom",
  "creditor_account": {
    "name": "Len Lease",
    "scheme_name": "iban",
    "identification": "AA00AAA000000000000000"
  },
  "currency": {
    "amount": 600,
    "code": "GBP"
  }
}

Two other BACS endpoints—Cancel BACS inbound transaction and Release BACS inbound transaction are discussed in the Suspense transaction flow section below.

BACS events

BACS payment processing generates the following events:

• BACS direct credit outbound payment processed—The Send BACS direct credit outbound payment endpoint generates this event.

• BACS direct credit inbound payment processed—The Release BACS inbound transaction and Cancel BACS inbound transaction endpoints generate this event.

• BACS direct credit outbound return payment processed—The Send BACS direct credit outbound payment endpoint generates this event.

• BACS direct credit reversal processed—The BACS scheme ran into an internal issue and requested the reversal of a previously processed transaction.

• BACS direct credit inbound return payment processed—Return payment bas been processed.

Suspense transaction flow

Pismo clients can use the suspense transaction flow to manage incoming BACS transactions that have been temporarily placed on hold due to suspected fraud pending a decision from the client’s anti-fraud (AF) provider.

Flow details:

1. BACS-in received from provider (credit to beneficiary). If anti-fraud is enabled, Pismo triggers anti-fraud workflow with client’s anti- fraud provider.
2. Anti-fraud provider responds:

• Approved—Transaction completes normally.
• Rejected—Pismo creates a BACS return.
• On hold —Transaction becomes a suspense transaction. For suspended transactions, Pismo moves the credited amount into Additional Funds (not available to the beneficiary).

3. Client calls BACS release or cancel transaction endpoints Client evaluates the anti-fraud context and uses Pismo’s suspense transaction endpoints to either release or cancel the transaction (reverses funds to sender).