CHAPS Payments Guide [Sending Money in the UK]

In this article, weโ€™re going to share everything you need to know about CHAPS Payments.

In fact, this article is part of our free series on how to send money online through bank transfers, direct deposit, and more – click here to unlock free access.

To continue exploring CHAPS payments, you can use the table of contents to jump ahead to the sections most relevant to you.

Table of Contents

  1. CHAPS Payments
  2. How Does a CHAPS Payment Work?
  3. Who Uses CHAPS to Send Payments With Bank Accounts?
  4. Frequently Asked Questions
  5. Ready to Explore Your Options?

CHAPS Payments

CHAPS payments stand for Clearing House Automated Payment System, which is a bank-to-bank method for transferring funds electronically in the United Kingdom. They are typically used for high-value transactions, as they are reliable and transactions are settled within the same business day.

Are CHAPS Used Only in the UK?

Yes, CHAPS payments are only acceptable in the UK as a method of transfer. This is because the Clearing House Automated Payments System (CHAPS) is a UK-based payment system that facilitates transfers between banks in the United Kingdom.

How Does a CHAPS System Work?

Hereโ€™s how the CHAPS system works:

  1. A payment is initiated using the CHAPS payment method via the sending bank.
  2. The payment information is verified by the sending bank.
  3. Payment is then sent to the recipient’s bank via the CHAPS Clearing Company.
  4. The receiving bank then verifies the payment details and credits the funds to the recipient’s account.
  5. The payment is settled and confirmation is sent to the sending bank.

Who Uses CHAPS to Send Payments With Bank Accounts?

Individuals, businesses, and professionals can use CHAPS to send payments with bank accounts. For example, individuals may use CHAPS when purchasing a property or sending funds to friends and family. On the other hand, businesses use CHAPS for settling invoices. And, financial professionals may use CHAPS when sending high-value transactions.

In fact, anyone or any entity with a UK-based bank account can use CHAPS to send payments. The defining feature of a CHAPS payment is that it is typically high-value, time-sensitive, and requires same-day settlement.

Client Types That Use CHAPS

  • Individual homebuyers
  • Businesses
  • Legal professionals
  • Finance professionals

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Frequently Asked Questions

Below are three of the most common questions that we receive from people asking about CHAPS payments. If you have further questions you would like answered, donโ€™t hesitate to get in touch with us directly.

What Is the Difference Between BACS and CHAPS Payment?

The main difference between BACS and CHAPS payments is that a BACS payment typically takes between two and three days while CHAPS payments clear on the same day. Also, BACS payments are typically free or have low fees while CHAPS payments cost more money. Lastly, BACS payments are used for smaller-value transactions while CHAPS payments are used for higher-value transactions.

Do CHAPS Payments Clear Immediately?

Yes, CHAPS payments clear immediately. This is because CHAPS payments are sent through a bank-to-bank electronic transfer. However, if a CHAPS payment is submitted after the sending bankโ€™s cut-off time (typically between 2 pm and 3 pm) then the payment will not clear until the next business day.

How Long Does It Take for CHAPS Payment to Go Through?

It does not take long for a CHAPS payment to go through. In fact, most recipients will have instant access to the funds. This is because CHAPS payments are processed and cleared immediately. At the very latest, transfers that are sent before a bankโ€™s cut-off time for CHAPS payments will be received on the same business day.

Ready to Explore Your Options?

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GlobalBanks Team
GlobalBanks Team

The GlobalBanks editorial team comprises a group of subject-matter experts from across the banking world, including former bankers, analysts, investors, and entrepreneurs. All have in-depth knowledge and experience in various aspects of international banking. In particular, they have expertise in banking for foreigners, non-residents, and both foreign and offshore companies.

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