BACS (Banks automated clearing system) is a long-established UK banking system for the electronic processing of financial transactions. It's the system that handles such transactions as Direct Debits and BACS Direct Credits. In 2007, BACS handled payments made by these two schemes amounting to £3.7 trillion.

BACS is a non-profit body currently owned by 13 of the leading banks and building societies in the UK and Europe.

BACS started service in 1968 as the Inter-Bank Computer Bureau. It was set up to streamline and reduce the paperwork involved in inter-bank fund transfers. In 1983, the BACSTEL telephone service was introduced and later the name was shortened to BACS. In 2003 BACS began to change from telephone based system to an internet-based service, BACSTEL-IP.

BACS has many advantages. It allows the automation of regular payments. It reduces the time and cost involved in making bulk payments as no cheques need to be written. It helps handle cash flow, and as a secure banking system, it lowers the risk of loss, late payment and theft. As the whole system is electronic, the risk of human error is greatly reduced.

BACS allows payments can be made up to 9:00 pm on a business day. The payment is then cleared to any bank account within two working days.

BACS also offers interfacing with internet commerce systems. It can be integrated with an e-commerce b2b purchasing system to permit organisations to settle accounts automatically.