What is the difference between CHAPS, SWIFT and Bacs payments? (2024)

FAQs

What is the difference between CHAPS, SWIFT and Bacs payments? ›

CHAPS vs Bacs

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.

With CHAPS you can send high value payments within the UK and make same-day transfers in GBP. This speedy service has fees applied to it. With Swift payments you have the security of tracked international payments, in any currency. Transactions can be slow, taking one to five working days.

There are two options to process Bacs direct credit payments, or “Bacs out”. You either run it through your bank, or you go to a Bacs Approved Bureau to process your Bacs payments. Either way, in order to make a Bacs payment as a business you'd have to sign up with Bacs in one way or the other.

Faster Payments allow you to send money from one bank account to another in just a few seconds, whereas BACS payments take up to three working days. When you use Faster Payments, you don't have to wait for hours or days for the money to arrive.

There is no charge to make or receive Bacs payments. You can use SWIFT payments to transfer money between different countries. There is a £25 charge to use this service. You can use CHAPS to make payments in the UK, in sterling, on the same day.

What is a SWIFT Payment? SWIFT payments are transactions made through an intermediary bank that allows you to send/receive electronic payments internationally. The SWIFT network doesn't actually transfer funds, nor is it a banking system, Rather, it sends payment orders between banks using SWIFT codes.

What does BACS stand for? BACS stands for Bankers' Automated Clearing System. It's a regulated payment system run by Bacs Payment Schemes Limited (now Pay.UK) and is one of the most common ways that money is sent and received from bank to bank.

The equivalent system to the UK's Bacs is the Automated Clearing House, or ACH. This network only works within the United States, so you won't be able to send payments to UK clients using ACH. It also only applies to banking rather than debit or credit card payments.

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.

What currency is used in BACS? ›

Currency and exchange rates: Because Bacs Direct Debit transactions are in British pounds sterling (GBP), businesses outside the UK need to manage currency conversion and exchange rate fluctuations when transferring funds to their local currency.

The upper payment limit for BACS payments is £250,000 per transfer. Businesses use the BACS payment network for routine transactions, such as paying employee wages, suppliers and pension payments.

BACS, or Bankers' Automated Clearing Services, is a simple and straightforward way to transfer money between different bank accounts. CHAPS, or Clearing House Automated Payment System, is a faster and more secure option for urgent transactions of significant monetary value.

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

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.

What does CHAPS mean? CHAPS – also known as Clearing House Automated Payment System – is a type of high-value, bank-to-bank payment system that provides irrevocable, settlement risk-free, and efficient payments.