By Mariana Almeida Marques
Very much like the UK uses the BACS scheme to process bank-to-bank transfers, Australia uses its very own payments scheme called BECS. In this article, we explore the BECS payment system and answer some of the most common questions around BECS payments.
BECS stands for Bulk Electronic Clearing System and it is an Australian system that processes bulk electronic transactions. It is managed by AusPayNet (Australian Payments Network, formerly APCA), a self-regulatory body composed of 120 members that include leading financial institutions in Australia. BECS functions under AusPayNet’s regulations and standards, and it carries an average yearly value of more than $15 trillion.
BECS electronic transactions can be direct debits, direct credits and one-off bank transfers. Card networks such as Visa and MasterCard are not involved. Instead, the sums of money are transferred bank-to-bank via the BECS scheme. Though it is generally used for low-value transactions, payers can actually transfer up to $100 million.
BECS Direct Debits are mainly used by companies with subscription models, such as insurance and utilities companies, for the collection of recurring payments. BECS Direct Credits are mainly used by companies to make bulk recurring payments such as paying employees’ salaries or benefits. BECS credit transfers are mostly used by individual customers to make one-off bank-to-bank transfers. Direct debits must be agreed and approved by the payer (customer) before they can be set up, and they have to be managed by the payee (company). Direct debit mandate management includes the storage, update and management of the Direct Debit contract.
In order for companies to start taking BECS Direct Debits, they must be approved and registered by a financial institution. Once they are registered, they will have a unique six-digit number that serves as identification.
Because BECS processes only bank-to-bank transfers and doesn’t involve any card network, the fees for BECS payments are much cheaper. It is also open to everybody that resides in Australia and has at least one bank account. Direct debits contribute to higher customer retention, because the payment is recurring and will be processed even if the customer’s card has expired. Direct debits use the customer’s bank account details, not their card details. Generally, direct debits also benefit the cash flow of the business, because the payments collection is automated and companies know what payments to expect and when.
The money sum is taken off the payer’s account as soon as the payment is initiated, and payments are processed and settled on the same day. Same-day settlement was introduced in November 2013 to improve efficiencies in transactions. Payments are exchanged in bulk, six times a day (10.00am, 1.00pm, 4.00pm, 6.30pm, 8.45pm and 10.30pm). Payment settlement will therefore occur during one of these times. However, it may take up to three days to receive confirmation of a BECS Direct Debit payment.
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