What is a CHAPS payment?

What does CHAPS mean?

CHAPS is an abbreviation for Clearing House Automated Payment System. This describes a kind of fast transfer that clears payments on the same day they’re made (but they shouldn’t be mixed up with Faster payments, which are a separate scheme).

How does CHAPS work?

CHAPS is an electronic payment system used for transactions in pounds sterling, and it has been overseen by the Bank of England since 2017. The process is simple enough, as we’ll show in more detail below. 

What are CHAPS payments used for?

CHAPS payments are typically used for high-value and urgent transfers. They’re often used by businesses and individuals that need to quickly pay a supplier, or time-sensitive payments like paying a house deposit. 

What are the benefits of CHAPS payments?

The biggest advantage of CHAPS payments is how fast they are. The guarantee of a same-day payment means they’re a reliable go-to for any payments with an urgent deadline.

Also, since there’s no upper limit on payments, they’re more flexible than some other options, like Faster Payments.

What are the disadvantages?

The main drawback of CHAPS payments is the potential cost. They tend to be more expensive than other payment types, although this depends on the bank.

Also, although there’s a same-day guarantee, CHAPS payments are not entirely flexible. It’s important to stay within the cut-off times for the same-day transfer, and it’s not possible to cancel a payment.

Which banks use CHAPS?

Most banks can facilitate CHAPS payments. While not all banks are direct participants in the system, they can still facilitate payments using intermediaries. With ANNA, we allow customers to receive CHAPS payments, but our customers can’t make them.

Also, the Bank of England supplies a full list of banks that are direct participants (not including those that use intermediaries). 

How to make a CHAPS payment

As with any bank transfer, you can set up a payment by heading to your bank in person or completing the transfer online. In some cases, it may also be possible to carry out a transaction using telephone banking.

What you’ll need to send a CHAPS Payment

To send a CHAPS payment, you need:

• Full name of the account holder you’re paying
• Sort code and account number of the person you’re paying
• Reference
• The amount you want to pay in the bank account

If entering a physical branch to carry out the transaction, you may also need your card, PIN, and some form of identification.

How do you receive a CHAPS payment?

The most important step is to ensure your bank or provider accepts CHAPS payments.

Aside from this, receiving CHAPS payment works much the same as receiving a transfer of any kind. Once you have supplied your account number, name, and sort code to the person who will pay you, all you have to do is wait for the money to hit your account.

How long does a CHAPS payment take?

A CHAPS transfer arrives the same day the payment is made as long as you initiate the payment before the CHAPS cut-off time. The system operates between 6am and 6pm on weekdays.

However, individual banks may have their own cut-off times. Also, there are cases when the bank may need to carry out checks in order to process the payment, which can mean delays.

What is the CHAPS payment limit?

There is no limit on CHAPS payments, so feel free to send as much as you want. Although be aware that some banks may have their own limits.

Is there a fee for CHAPS payments?

There are usually fees for CHAPS payments, but these are down to the specific bank.

With ANNA, pricing depends on the tier of account you have:

• Pay As You Go: £5
• Business: 1 free payment per month, £5 per payment after
• Big Business: 4 free payments per month, £5 per payment after

Some banks can charge as much as £30 for a payment. 

CHAPS vs Bacs

BACS is another type of payment you’re likely to encounter. They’re different from CHAPS because they take up to three working days to clear, making them a much slower option.

What are the alternatives to CHAPS payment?

As well as BACS, one of the best alternatives to CHAPS payments are Faster Payments. Like CHAPS payments, these transfers are known for their speedy timeframe. Unlike CHAPS, they function around the clock on all days of the year (even bank holidays and weekends), allowing some more flexibility.

ANNA supports various payment types, including BACS, Faster Payments, and CHAPS.

FAQs

Are CHAPS Payments Secure?

CHAPS payments are highly secure. The Bank of England operates the system and follows thorough security processes, such as regular audits and the use of the SWIFT messaging network.

Can a CHAPS Payment be reversed? 

Generally, CHAPS payments cannot be reversed. But there are some exceptions, such as court orders or accidental duplicate payments. Contacting your bank immediately after a misdirected payment is the best way to improve your chances of a reversal.

Is CHAPS the same as a Bank Transfer?

A CHAPS payment is one type of bank transfer, but not all bank transfers are CHAPS payments. Different types have distinct costs, features, and speeds.

What is the difference Between CHAPS, BACS, and Faster Payments?

BACS transfers take 3 business days and have low costs, while CHAPS transfers take place in one day and have higher costs. Faster payments are both fast and low-cost, but payments are usually limited to less than £1 million, while CHAPS payments have no upper limit.

Can CHAPS payments be used for international transfers?

CHAPS is only for domestic transfers since the system is designed specifically for sterling payments within the UK. However, other systems can be used for international transfers, such as SWIFT.