What is a CHAPS payment?

For enterprise, managing large payments is key to keeping things running smoothly and maintaining healthy cash flow. CHAPS payments make it easy to handle big transactions quickly and reliably, helping to keep business operations on track.

In this guide we’ll cover:

• What is a CHAPS payment?
• What does CHAPS stand for?
• What is the purpose of a CHAPS payment?
• How does it work?
• What is the advantage of using CHAPS?
• What is the disadvantage of using CHAPS?
• Is CHAPS secure?
• Is there a payment limit on CHAPS payments?
• The difference between CHAPS, Bacs, and Faster Payments
• CHAPS payment handling at Barclays, HSBC, and NatWest
• How Dojo can help
• FAQs

CHAPS 101: What’s a CHAPS payment?

CHAPS is a same-day money transfer system used by UK banks for transactions in pounds sterling. Run by the Bank of England, it’s perfect for high-value, time-sensitive payments.

What does CHAPS stand for?

CHAPS stands for Clearing House Automated Payment System. It’s been the standard for large, swift transfers between UK banks since 1984. 

High stakes: Why CHAPS?

CHAPS payments are perfect for larger transactions like buying business equipment, paying big bills to HMRC, or covering major expenses in cafes and bars. 

While there are fees, CHAPS is the go-to for high-value transfers thanks to its security and speed, with no limit on the amount.

The mechanics: How does it work?

To guarantee same-day transfers, CHAPS payments need to be submitted before the bank’s cut-off time, typically between 3:30pm and 4pm. Missing the deadline means the payment will be processed the next working day. It’s important to note that CHAPS payments are irreversible once sent.

Setting up a CHAPS payment is easy. With the right transaction and recipient details, transfers can often be initiated as early as 6am, depending on the bank.

The perks: Why using CHAPS pays off

• Speed: Get your money transferred on the same day.
• No upper limit: Send any amount without restrictions.
• Secure: Managed by the Bank of England.
• Reliable: Guaranteed processing time for urgent payments.

The flip side: What are the drawbacks of using CHAPS?

• Costly: Costs between £15 and £30 per transaction.
• Time-sensitive: Payments must be made before the bank’s cutoff time.
• Irreversible: Once sent, the payment can’t be stopped or reversed.
• Limited use: Not ideal for batch or bulk payments.

Safety first: Is CHAPS secure?

Absolutely. Managed by the Bank of England, CHAPS is designed to keep payments safe. With strong protections in place, it’s a trusted choice for handling high-value transactions.

The ceiling: Is there a payment limit on CHAPS?

No, there’s no upper limit on CHAPS payments – whether you’re transferring a few thousand or millions. It’s perfect for those big-ticket transactions that need to go through quickly and reliably.

Compare and contrast: The difference between CHAPS, Bacs, and Faster Payments

There are a few alternatives to CHAPS, here’s how they compare: 

CHAPS: Fast, same-day transfers for high-value transactions with no upper limit. It’s secure but comes at a cost of £15 to £30 per transaction. Ideal for urgent and large payments.

Bacs: Great for bulk payments like payroll and direct debits. It’s much cheaper than CHAPS but takes a bit longer – usuallyaround three business days. Bacs are perfect for routine, non-urgent transactions.

Faster Payments: Quick transfers for lower-value payments, usually processed within a few hours. There’s a £250,000 limit per transaction – ideal for smaller, everyday business expenses.

How they do it: CHAPS payment handling at Barclays, HSBC, and NatWest

Here’s an overview of how Barclays, HSBC, and NatWest handle CHAPS payments, including fees, cut-off times, and additional details.

*Information taken from bank websites and correct as of November 2024.