CHAPS vs. BACS payments: What’s the difference?

Sending money anywhere has never been easier. Whether you’re transferring money to a friend within Singapore or using your bank’s website to send money anywhere else in the world—cash is always a tap away.
This is especially great for businesses, as it simplifies how you send and receive payments. You almost never have to leave the comforts of your office for the bank.
As a business, you’re usually transferring large sums of money on pre-determined deadlines. It’s a little more complex than paying a friend back for last week’s chicken rice dinner.
If your business in Singapore needs to make payments to anyone in the United Kingdom, there are two main payment networks you’ll be using: CHAPS or BACS.
Let’s look at the difference between CHAPS vs BACS, and what this means for your business.
What is a CHAPS payment?
Despite its laidback acronym, CHAPS’ full name is pretty boring. CHAPS stands for Clearing House Automated Payment System.
CHAPS is the UK’s bank-to-bank transfer system that runs through the SWIFT network—which most of us in Singapore are familiar with. It’s typically reserved for once-off, high-value payments that need to be sent and received on the same day. From purchasing property, paying tax, or purchasing vehicles for your business. CHAPS payments begin from £10,000, with no transfer caps and no upper transfer limit.
These types of payments tap into a wide network, with over 30 direct banking participants and more than 5,000 financial institutions across the UK able to make and accept CHAPS payments.
What is a BACS payment?
BACS stands for Bankers Automated Clearing Services.
This is the bank transfer method that handles all direct debit and credit transactions in the UK. Because of this, it’s the most common bank transfer method used by UK businesses.
BACS payments take longer than CHAPS payments, and are normally used for high-volume, low-value transactions. BACS payments have a limit of £250,000 per transfer.
The BACS payment network is used for routine/daily payments, like regular bank transfers, payments to suppliers, and employee salaries.
Established in 1968, the BACS system has been in operation for over 50 years, making it the system that everyone in the UK is familiar with.

So, what’s the difference between BACS and CHAPS?
Simply put, it comes down to what business payment needs you need met.
CHAPS payments are for high-value, time-sensitive payments, such as a payment on a property or a large, expensive business asset. It’s for when time is of the essence.
BACS payments are for routine, everyday payments that aren’t as time critical, such as paying your suppliers or sending your staff their weekly wages.
Is BACS or CHAPS faster?
BACS payments can take anything between two to three days to complete, so it isn’t an option if you’re in a hurry.
CHAPS payments are much faster, with bank-to-bank transfers completed within hours. You’re usually able to get same-day payments if your transfer is made before 3:00pm to 5:00pm that day. Otherwise, your payment will clear the following day.
Which payment method is more expensive?
BACS payments are one of the cheapest ways to transfer money between banks. You can expect to pay anywhere from 5-50 pence (~ SGD 0.10 - 1.00) (plus any additional fees charged by the banks) per transaction.
CHAPS payments are much higher. This is because your bank or payment partner is required to pay for access and maintenance costs for the software and hardware needed to complete your transfer. For CHAPS payments, you can expect to pay anywhere from £25-£35 (SGD 45 - 65) per transfer. As such, making a high volume of these types of payments isn’t advisable.
Airwallex international payments is faster AND cheaper than both BACS and CHAPS
Airwallex exists as an alternative to both of these methods. Our goal is to make it as easy as possible for you to make your payments. Plus, why should you be paying more on top of your bills?
That’s why Airwallex charges up to $0 fees for local or international transfers. No matter the value you’re sending or the number of payments you’re making, transfer money with lower fees.
You get practically instantaneous, same-day transfers on your transactions, too. That’s because we use your local payment networks—not the SWIFT network—so your money is received in one business day or less, without the hefty fees.
Now you know the difference between BACS and CHAPS. The one thing they have in common is that they charge fees. Try Airwallex instead for a cheaper, faster alternative.
Create your Airwallex account and you’ll be able to open a UK bank account in just seconds. Pay like a local, all from the comforts of Singapore.
Get in touch with us today for a demo, and see how we can help you take the hassle out of making your business payments from Singapore to the UK.

Related article: What is the SWIFT Payment Network?
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