What is the Bulk Electronic Clearing System (BECS)?

BECS allows businesses to make arrangements with their financial institutions to debit and credit customers’ accounts regularly. Though typically reserved for smaller transactions (like recurring bills, payroll payments, and social security benefits), BECS can carry out payments up to $100 million.

How does BECS work?

BECS is overseen and managed by the Australian Payments Network (AusPayNet). Composed of 120 members, including leading financial institutions in Australia, AusPayNet is responsible for the rules surrounding:

• Processing direct credit and debits
• Administering Bank State Branch (BSB) numbers, the 6-digit code that represents your bank, state, and branch location
• Helping BECS members resolve mistaken payments

Within this regulatory body, BECS manages three kinds of payments:

Direct Debits

Direct debits are electronic withdrawals made by billing organizations, like insurance or utilities companies, which collect regular payments. For companies to begin accepting this automated payment method, they must first get approved and registered with a financial institution. Once they are registered, they are given a unique six-digit identification number. With BECS direct debits, it can take up to three business days to receive confirmation about a transaction after initiating a debit from the customer’s account.

Direct Credits

Direct credits refers to electronic deposits into an account. Often used by companies to make bulk recurring payments, including employee payroll or benefits premiums. Direct credit payments are processed and settled on the same day.

Credit Transfers

Mostly used by individual consumers to make bank-to-bank transfers, BECS credit transfers are less commonly used than direct debits or direct credits. Credit transfers are typically one-off payments made by individuals rather than companies.

BECS direct debits and credit payments are initiated from files containing batches of payment instructions. These instructions are compiled by paying or payee institutions, or their agents, and passed on to financial institutions with BECS membership. From there, payments are settled in batches on a same-day basis, five times a day.

Who uses BECS—and why?

BECS currently has 71 participants, primarily financial institutions like the Reserve Bank of Australia (RBA). Available to both businesses and individuals in Australia and New Zealand, BECS is more commonly used by companies for recurring bulk payments (i.e., direct credits).

Why? The BECS system streamlines payments across Australia and New Zealand by processing bank-to-bank transfers without a card network. As a result, the fees associated with BECS payments are much lower for businesses. With payments being settled in batches on a same-day basis, five times a day, bulk payment operations are increasingly frictionless.