BACS or Faster Payments: Which should you choose?
14th October 2015 | Hudson Contract
We’re still a long way away from the cashless society. But in today’s 24/7 society, the advent of Faster Payments, the only UK payment system available day and night, 365 days of the year, has its attractions, with over 1.15 million transactions in the year ending May 2015 – up thirteen per cent on the previous twelve months.
So should you use it instead of BACS for your payroll instructions?
Faster Payments – The Advantages:
- Definitely quicker: Can be within the receiving account in a couple of hours – and often within minutes
- Secure: Central system available only to financial institutions whose IT systems and processes meet strict requirements
- Reduces risk: Gives you a contingency so that if BACS processes are delayed you can still make payments on time
Faster Payments – The Downside:
- Risk: Payments once sent, cannot be cancelled or traced – even if you realise you’ve paid the wrong person
- Notification: Your operatives do not get a text message regarding their payment
- Not guaranteed: No compensation if your Faster Payment fails to arrive
BACS – Why Hudson Contract continues to recommend this option:
- Simple, secure and reliable
- You retain greater control and visibility of your payments
- Saves you time
- Improved cashflow management, as payments arrive instantly as cleared funds, and we can pay the money out straight away
- Cleared funds are usually in the operatives’ accounts at the start of business
- We usually have the ability to recall payments made in error
- Payments can still be traced weeks later
- Your operatives receive a text message telling them how much they’ve earned and when the funds will be in their accounts – giving them peace of mind
- You can make additional payments if required, e.g. if an operative is missed off your instruction
The HSBC system failure over the August Bank Holiday is still fresh in our minds, with 275,000 payments affected. But for now, we believe that BACS is still the best, with Faster Payments as a good back-up.
