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What is bank giro credit (BGC)?

Last editedMar 20222 min read

There’s a multitude of payment methods to choose from when it comes to settling unpaid bills. Cash and cheques often go hand in hand with bank giro credits, or BGCs. If you’ve noticed the acronym at the bottom of a bill before, you might be wondering what does BGC mean exactly? We’ll discuss how a bank giro credit transfer works – and when to use it – below.

Bank giro credit explained

The term ‘giro’ means ‘circulation of money’ and bank giro transfers are frequently used throughout European countries as well as within the UK.

A bank giro credit (BGC) is a standard form that comes with a service provider’s name and account details already printed on it. Customers can fill out the form and submit it to a bank along with cash or a paper cheque for payment. The bank uses the details written on the BGC form to pay the specified sum to the service provider or organisation.

What are bank giro credits used for?

What differentiates a BGC from a Direct Debit transfer, cash, or cheque is that it doesn’t function as a form of payment on its own. It simply provides instructions for payment into a specific account. You’ll often find these forms attached to the bottom of bills received in the mail, including:

  • Gas and electricity bills

  • Credit card bills

  • Council tax statements

Most of the time, payments are sent directly to the bill issuer according to an invoice’s payment instructions. However, sometimes bank giro credits are paid directly to the bank alongside cash or cheques. If you use a chequebook, you might also have bank giro credit transfer forms included to pay cash or cheques into one of your own bank accounts.

What does BGC mean vs paying-in slip?

If you look at the back of your cheque book, you might see one of two forms:

  • Paying-in slips are personalised with your bank account details. They can be used to pay in cash or cheques at your bank. They’re often only accepted at the specific branch where you hold an account.

  • Bank giro credit forms are very similar, but they give more flexibility and can be used to instruct a bank transfer between branches or to pay bills.

Banks only accept paying-in slips from account holders because this allows them to conduct money laundering checks and reduce the risk of fraud. The bank already has the account holder’s details on file, enabling these security checks for a more secure transfer.

How does a bank giro credit transfer work?

What happens once a bank giro credit and accompanying payment are submitted to the bank? The clearing process is similar to cheque processing. The payment request is forwarded to the giro centre, which verifies that funds are available in the payer’s account. The funds are immediately debited and electronically transferred via the giro centre’s clearing process into the payee’s account.

The full process takes approximately three business days, using the same processing procedure and exchange centres as paper cheques. However, in the case of a payment made in your own bank branch, the funds should be available much faster.

Alternatives to bank giro credit transfers

A giro interbank transfer is a very specific method used to pay bills, however the bank giro credit on its own is not a form of payment. It requires the additional use of cash or cheque to complete the transfer. Today, most businesses prefer to send and receive payments online and there are plentiful alternative options including mobile payments, debit and credit card payments, and digital wallets.

Compared to the complex clearing and processing involved with a giro interbank transfer, Direct Debit offers a simple, pull-based payment solution. GoCardless facilitates Direct Debit payments, allowing businesses to take recurring payments automatically without all the paperwork of a bank giro credit.

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