What is the difference between BACS and CHAPS? (2024)

FAQs

What is the difference between BACS and CHAPS? ›

CHAPS is used for time-sensitive payments. Provided you've made the transfer prior to the cut-off time, your payment will arrive on the same day. This cut-off is between 3 pm for in-person payments, and 5 pm if you're making the payment online. Bacs is used for payments that aren't as time sensitive.

CHAPS vs BACS: which is faster? As explained above, CHAPS is significantly faster than BACS as it clears the transactions in a matter of hours, making same-day payments possible. As BACS takes up to two to three business days to clear, it is not the best option for time-sensitive transactions.

Is Bacs the same as a bank transfer? Bacs is a form of bank transfer and the two terms are often used interchangeably. There are also other types of bank transfers to be aware of (each has its own characteristics), such as CHAPS and Faster Payments.

Corporates use CHAPS for high value and time-sensitive payments such as to suppliers or for payment of taxes. CHAPS is commonly used by solicitors and conveyancers to complete housing and other property transactions. Individuals may use CHAPS to buy high-value items such as a car or pay a deposit for a house.

One of the main disadvantages of the scheme is cost. CHAPS payments can be expensive, with most banks charging a fee for the service. The cost of the transaction is usually higher than other payment methods, on average around 25 GBP, but CHAPS charges vary from bank to bank.

Bacs allows you to schedule regular payments via its direct credit or direct debit payments options. This is the reason why the UK Government uses Bacs for pension and welfare payments, and why it is the most popular payment method for employers paying employees.

BACS are ideal for everyday transfers such as utility bills, and are usually fee-free. BACS transfers can be made only within the UK and aren't instant, taking up to three working days. With Swift you have the security of tracked international payments, in any currency.

For example, all CHAPS and TARGET2 payments are sent through the SWIFT messaging network. It is also the go-to network for transmitting cross-border payments in multiple currencies for both business and private needs.

In order to qualify for Bacs payments you need to apply for a SUN. This is a lengthy and expensive application process through your bank. Once you obtain a SUN you can either make Bacs payments through your bank, or use third party software (Bacs Approved Bureau).

Is CHAPS only for GBP? ›

CHAPS can only be used to settle sterling transactions within the UK and the system is managed by the Bank of England.

How to transfer money using CHAPS. Online – if you are a Business Customer using Bankline (Fees may apply) – payment cut off time is 5:30pm. This is extended to 6:15pm if the beneficiary account is held at another NatWest sort code.

If an error is made on a CHAPS form, the payer should seek urgent relief in the form of a freezing order against the unintended recipient.

How to make a CHAPS payment. You can send money up to your personal payment limit to friends and family or up to £25,000 for payments to a company via online and mobile banking.

There's no fee for each CHAPS payment if you're a Personal, Premier or Platinum customer.

Bacs bank transfers are extremely safe for your customers. Firstly, only approved organisations can collect Direct Debit payments, either independently or through a heavily vetted Bacs Approved Bureau or Facilities Management Provider, like Interbacs.

Can BACS Be Used for International Payments? No, it is a UK-based system and is not designed for international transfers. However, there are other payment systems available for international transactions, such as SWIFT.

Most organisations benefit from paying salaries or wages by Bacs Direct Credit – in fact, eight in ten employees in the UK are paid this way.

Benefits of being paid direct

Unlike cash or cheques, Bacs Direct Credit payments cannot be lost, stolen or delayed in the post. Your money arrives automatically into your account on the day it is expected. Organisations using Bacs Direct Credit typically pay earlier than those who don't.