Why are most employees paid via BACS, not Faster Payments?

Why are most employees paid via BACS, not Faster Payments?

Is it just a holdover from a time before FPS? Is there a need to recall payments?

BACS has existed for quite some time before FPS. Most employer payment systems are set up to support this and it’s just the way it’s done.

Many employers now pay via FPS too as they don’t have the old drawbacks.

I would think the better cashflow would be a cost incentive for business to change.

FPS is already cheaper but it’s just not built into the current processes of many business and their payroll systems so there’s a cost involved in switching over.

The interest gained by sending payments later I would think would outweigh this.

For large corporates I’m sure this would be the case but for the average employer I’m not so sure


@Ordog why was this moved to Monzo USA?

I’ve moved it to a more appropriate place.

I’d have thought that if there was a financial incentive for employers to pay by faster payments they’d be all over it by now…

FPS isn’t cheaper - we use both and BACS works out to be about 5p cheaper. That said we’re on a stonking deal for faster payments. That said I’ve seen FPS be £5 per payment compared with 50p for BACS.

(Background I essentially work within a payroll bureau).

BACS can is also guaranteed, so for example if you have cash coming in and it doesn’t hit your account in time you’ll have a headroom limit with your bank (almost like a lending facility and credit checks are done) where you can put up to a certain amount on without having funds in place. Even if the funds aren’t in (for example a bigger DD than usual went out) - the BACS payment will generally go (after a quick call to confirm funds are coming in) where as FPS will just fail.

So cheaper AND guaranteed to go BACS


Not usually the case. BACS IP systems can usually use the same import file to send BACS or FP.


Fascinating, thanks so much for sharing!

£5.00! wow business are getting ripped off. I hope Monzo for payments functionality is not nearly as pricy!