Page last updated at 09:33 GMT, Friday, 30 March 2007 10:33 UK

Q&A: Pay-day problems and glitches

Pay slip
Banks have said they will refund fees should a client have problems
A problem with the Bacs banking system means that as many as 400,000 people will not be paid as expected on Friday.

So why has this happened, how does the system work and what will it mean for people who have missed out on pay day?

What happened?

According to the Association of Payment Clearing Services (Apacs), a software problem has led to widespread failure of the electronic payment system Bacs.

Bacs, an electronic means to process financial transactions, has been running slowly and so not all payments have been sent out in time.

How will this affect me?

Simply put, your pay won't hit your bank account and you may not be able to pay bills or get cash for the weekend.

As an employee, your company should tell you if you are affected by the problems and you should get your pay by Monday.

Apacs said that bank charges will be refunded if a customer goes overdrawn or busts through their overdraft limit because of the problems.

Should you need cash, then it might be best to go into a branch and withdraw the money over the counter as cash machines might refuse, Apacs said.

What exactly is Bacs

It's the behind-the-scenes payment system banks use to send money to each other and their customers electronically.

Bacs runs automatic transfers such as direct debits, direct credits such as monthly salary payments from employers to their staff, and standing orders.

It is also the system that underlies both the telephone and internet banking services offered to the public.

There are more than five billion Bacs payments every year. Nearly 20 million salaries - more than 90% of the total - are paid using the system each month.

The government also uses it, and makes benefit payments, tax credits and pension payments via Bacs.

It must be very high-tech?

The Bacs system first started in 1968.

Not surprisingly it is all based on computers, which are owned and run by a separate but associated company called Voca.

It can take anything up to four days for a salary or direct debit payment to go through, leaving one account and ending up in another.

In the early days, bank staff would make telephone calls to initiate transfers with magnetic tapes being loaded onto computers. Today it is all done over the internet.

Is it the only way to transfer money?

Other bank transmission services exist such as Chaps.

This arranges for money to be transferred from one account to another in just one day, but is more expensive to use and is aimed at moving larger sums.

Many people will have come into contact with this system when their solicitor sends off their money, or their mortgage lender's money, to complete a house sale.

Banking hitch delays workers' pay
30 Mar 07 |  Business
Reduction in card fraud in 2006
14 Mar 07 |  Business
Credit card spending shows fall
02 Feb 07 |  Business
Online banking fraud 'up 8,000%'
13 Dec 06 |  UK Politics
Time limits for clearing cheques
14 Nov 06 |  Business
Cheque-writing rules tighten up
28 Sep 06 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific