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What is a CHAPS Payment Your Best Option for Fast and Easy Large Transfers

What is a CHAPS Payment? Your Best Option for Fast and Easy Large Transfers

Imagine you need to send a large amount of money quickly and safely, like when you’re buying a house or paying for something important. You wouldn’t want to wait days for the money to arrive, right? That’s where a system called CHAPS can help you!

So, what is a CHAPS payment? In this post, you’ll learn what CHAPS payments are, how they work, and why they’re useful. By the end, you’ll understand how CHAPS can help you send money quickly and safely.

What does CHAPS Mean?

It means Clearing House Automated Payment System, a high-value bank-to-bank payment system. It allows you to make payments that are final, risk-free, and processed quickly.

Most major high-street banks use CHAPS directly. A few international and custody banks are also participants. You can find a complete list of banks involved in CHAPS on the Bank of England’s website.

What’s the difference between Bacs, Faster Payments and CHAPS?

Sometimes, you might mix up Bacs, Faster Payments, and CHAPS. They’re all ways to transfer money between banks, but each works differently.

Bacs

Bacs is a common way to transfer money between banks in the UK. It has two main types:

  • Direct Debit: This is when you let someone take money from your account, like for paying bills.
  • Direct Credit: This is when someone puts money directly into your account.

Using Bacs doesn’t cost you anything, but be prepared to wait. It usually takes up to three working days for the money to clear.

Faster Payments

Faster Payments is all about speed. You can use it to send money quickly within the UK. These transfers can be done online, over the phone, or at a bank. Since February 2022, you can send up to £1 million almost instantly using Faster Payments.

CHAPS

A Clearing House Automated Payment System. It’s used for high-value, bank-to-bank transfers. With CHAPS, payments are processed the same day and are final. This makes it perfect for large or urgent transactions.

Benefits of Using CHAPS Transfers

CHAPS transfers offer a quick and reliable way to send large sums of money. Here’s why you might find them useful for your business needs:

Fast and Efficient

CHAPS transfers are completed on the same business day, saving you from costly delays. This speed is ideal when you’re closing deals, meeting deadlines, or handling urgent payments.

Direct and Simple

CHAPS moves money directly from one bank to another. Without middlemen, your transfers are quicker and easier to manage, making it straightforward for you to track payments.

Easy to Trace

Each CHAPS transaction is detailed and easy to trace. This simplifies keeping accurate records, meeting compliance requirements, and verifying transactions in your accounts.

Downsides of Using CHAPS Transfers

While CHAPS transfers have their advantages, there are some downsides you should consider:

Cost

CHAPS transfers tend to be more expensive compared to methods like BACS or Faster Payments. The fees vary by bank but are generally higher due to the speed and security offered.

Cut-off Times

If you want a CHAPS payment processed on the same day, you need to initiate it before the cut-off time. This deadline usually falls in the early afternoon and varies between banks. If you miss this deadline, your payment will be delayed until the next working day. This can be a problem if you need to make an urgent payment.

Irreversibility

Once you make a CHAPS payment, it can’t be reversed. If you make a mistake, such as entering the wrong account number, recovering the funds is not straightforward.

How Much Do the Major UK Banks Charge for CHAPS?

The fee to send a CHAPS payment varies by bank, generally ranging from £20 to £30 per transaction. Here are some examples:

  • HSBC: £20 to £40, depending on the method (online, phone, or branch).
  • Co-Operative Bank: £25 standard charge.
  • Lloyds Bank: £30.
  • Barclays: £15 for Business Banking customers; no fee for Personal, Premier, or Platinum customers.
  • Royal Bank of Scotland (RBS): £20.
  • TSB: £30.
  • First Direct: £17 for phone banking or post; free for mobile or online banking.
  • Virgin Money: £30 fee.

Can You Use CHAPS for International Transfers?

No, you can’t use CHAPS for international transfers. CHAPS is specifically for sterling payments within the UK. It doesn’t support foreign currencies or cross-border transactions. 

However, CHAPS can be used to send money in sterling to a branch of the same multinational bank within the UK. This is possible as long as the transfer remains in sterling currency.

Are There Limits on CHAPS Payments?

There are no limits on CHAPS payments. Whether you’re sending a large sum to a supplier or making a tax payment, CHAPS allows you to transfer any amount of money. This makes it perfect for high-value, urgent transactions.

How Long Does a CHAPS Payment Take?

CHAPS payments will arrive on the same day if you make them before the cut-off time set by your bank. The cut-off times vary:

  • Barclays: If you’re paying in a branch or by phone, make sure to do it before 3:30 PM. For online payments, you have until 5 PM, from Monday to Friday.
  • Halifax: You need to complete your payment before 4:25 PM on a working day.
  • Santander: You can make payments via telephone banking between 8 AM and 6 PM any day of the week, or in branch before 3 PM.

If you make a CHAPS payment after the cut-off time, or on weekends and public holidays, it will be processed the next working day. Additionally, there might be delays if your bank needs to get in touch with you regarding the payment.

How to Make a CHAPS Payment

CHAPS lets you transfer money to another UK bank and ensures it reaches the same day. It’s commonly used for urgent or high-value transfers like buying a house or making a large deposit.

To make a CHAPS payment, you usually need to provide:

  • Sort code
  • Recipient’s name
  • Account name
  • Account number
  • Amount
  • Reference or other payment details

You can make a CHAPS payment by:

Visiting a branch: Bring your debit card and ID (passport or driving license). Some banks may charge a fee.

Using online banking: You need to be registered for online banking and might need a PINsentry. Some banks offer free CHAPS payments at any time, while others may have restrictions.

Calling over the phone: Premier Banking customers who use telephone banking can make CHAPS payments over the phone. Be aware of the cut-off times for same-day payments.

Is a CHAPS Payment the Same as a Bank Transfer?

CHAPS and a bank transfer are both methods of transferring money, but they have some differences. Here’s a comparison:

AspectCHAPS PaymentBank Transfer
SpeedSame day (often within a few hours)1-2 business days (domestic), longer for international
CostHigher (typically £20-£30 per transaction)Usually lower or free, depending on the bank
UsageLarge, time-sensitive transactionsRegular, non-urgent transactions
AvailabilityBusiness days, usually until 5 pmAvailable 24/7 for most banks
LimitsNo maximum limitMay have daily or transaction limits
Processing MethodReal-time gross settlementBatches or automated clearing
Typical UsersBusinesses, high-value personal transfersEveryday users, smaller amounts

Final Thought

Now that you know What Is a CHAPS Payment, let’s look at how they can help your business. If you need to send high-value funds quickly, CHAPS payments are incredibly convenient.

For any business, including those with physical stores, having a reliable card machine is crucial. Whether you choose a portable, countertop, or mobile device, our card machines can simplify payments for your small business.

If you want to learn more about our payment solutions or need advice, contact our dedicated experts today. You can also visit our blog to find out more about how PaymentSave’s technology works.

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