What are CHAPS payments? How they work, what they cost, and when to use them

Key takeaways

• CHAPS payments are same-day, high-value GBP transfers. They’re processed in real time through the Bank of England, with no upper transaction limit.

• CHAPS costs £20 to £35 per transaction and only runs on UK business days. So, Faster Payments is often a cheaper and more flexible option for many transfers.

• Through our partnership with ClearBank, Airwallex gives businesses access to CHAPS, Faster Payments, and Bacs. You also get multi-currency accounts and international transfers on one platform.

A CHAPS payment is a same-day, high-value GBP transfer. It’s processed in real time through the Bank of England. If you’ve ever bought a home in the UK, you’ve likely used CHAPS, although you might not have known it at the time. Businesses and banks use it for property purchases, corporate deals, and interbank payments.

If you’re making a large UK payment, it helps to know when CHAPS is the right choice. You’ll also want to know when cheaper options make more sense. This guide explains how CHAPS works, what it costs, who uses it, and when Faster Payments or Bacs might be a better fit.

What are CHAPS payments?

CHAPS payments are handled one at a time, in real time, through the Bank of England’s settlement system. This gives an immediate and final transfer of funds. Unlike many other payment methods, CHAPS has no upper transaction limit which makes it a strong option for urgent, high-value payments such as:

• Corporate payments to suppliers and business partners

• Interbank settlements between financial institutions

• Property purchases, including mortgage and deposit transfers

The system uses Real-Time Gross Settlement (RTGS). That means each payment settles on its own, as soon as it’s approved. Think of it like a direct handshake between banks. It’s not like putting your payment in a queue with everyone else’s. So your money doesn’t sit in a holding pattern. It’s settled as soon as it’s approved.

What is Real-Time Gross Settlement (RTGS)?

RTGS is a way to process payments where each transaction settles on its own and straight away. It isn’t grouped into batches. Think of it like a direct handshake between banks. It’s not like putting your payment in a queue with everyone else’s. The benefit? Your money doesn’t sit in a holding pattern. It’s settled as soon as it’s approved.

CHAPS was introduced in 1984. It was built to be a faster and more reliable option than traditional bank transfers. In 2017, it came under Bank of England control.

How does a CHAPS payment work?

CHAPS payments clear one by one, in real time, through the Bank of England’s settlement system. That means there’s no batching and no built-in delays. Each payment is final as soon as it’s approved.

Here’s how that works:

• The sender asks their bank to make a CHAPS payment. They can often do this online, in branch, or through a corporate banking platform.

• The bank checks the funds and the payment details. It makes sure everything is correct.

• The payment is sent through the SWIFT network. It’s then submitted to the Bank of England for approval.

• The receiving bank gets the funds. It then releases them to the recipient on the same day.

Operating hours and cut-off times

• CHAPS runs from 6.00am to 6.00pm (UK time), Monday to Friday (excluding bank holidays).

• Banks must be ready to receive CHAPS payments by 8.00am and send them by 10.00am.

• For customer payments, the deadline is 5.40pm.

• If a payment’s made after these cut-off times, it’ll go through the next working day.

How much does a CHAPS payment cost?

CHAPS is one of the most expensive payment methods in the UK. That’s why it’s usually only used when same-day settlement really matters. Most banks charge £20 to £35 per transaction.

To put that in context:

• Faster Payments is usually free for personal users and low-cost for businesses

• Bacs costs just pennies per transaction

• Some premium business accounts offer discounted or waived CHAPS fees for frequent users

Because the fees are high, CHAPS isn’t the default for most businesses, even for large payments. Faster Payments is now replacing CHAPS for many high-value transfers. It offers near-instant settlement at a small part of the cost. Still, CHAPS remains the top choice when you need full certainty and same-day settlement.

Who uses CHAPS payments?

CHAPS is mainly used for high-value payments where timing matters and same-day settlement is needed. Individuals do use it at times. For example, they may use it for a property purchase or a large asset, like a vehicle. However, the main users are banks, large businesses, and the property sector.

Banks and financial institutions

Banks and financial institutions are some of the biggest CHAPS users. They use it to:

• Settle interbank payments for lending, borrowing, and liquidity management

• Process foreign exchange transactions that need same-day settlement

• Manage large financial settlements for investment firms and trading platforms

Large businesses

Large companies use CHAPS when they need to be sure a payment will arrive the same day:

• Supplier payments for high-value purchases like raw materials or machinery

• Tax payments to meet obligations without delays

• Corporate treasury transfers between different accounts

Property

CHAPS has an important role in the UK property market:

• Solicitors and conveyancers use CHAPS to move funds between buyers, sellers, and mortgage lenders

• Lenders and buyers rely on it for mortgage repayments and deposits before deadlines

• Commercial property deals often need CHAPS because the transaction values are high

CHAPS vs other UK payment methods

The wider UK payment infrastructure is run by Pay.UK. It oversees the systems used for most day-to-day transactions. CHAPS handles far fewer payments than these other systems. But the payments that do go through are usually very large.

The key difference is this: Faster Payments now supports payments up to £1 million and runs 24/7. That makes it a real option for many high-value transfers that used to need CHAPS. If you don’t need Bank of England settlement, and you can stay within the limit, Faster Payments is usually the better pick.

In comparison, Bacs is best for routine and non-urgent batch payments. Common examples include payroll and supplier invoices. In these cases, the three-day cycle usually isn’t a problem. SWIFT is the main choice for international transfers. It doesn’t move money by itself. Instead, it sends secure payment instructions between banks around the world.

Read more: CHAPS vs. Bacs: What's the difference?

Advantages and disadvantages of CHAPS

Advantages:

• Guaranteed same-day settlement — no waiting and no delays

• No transaction limit — move as much money as needed

• Highly secure — the Bank of England handles settlement. Also, each transaction is processed on its own, not in a batch, which helps reduce fraud risk

Disadvantages:

• Expensive — costs much more than Faster Payments or Bacs

• Limited availability — only works on business days and within set hours

• Irreversible — if a mistake is made, it can’t be undone

How to send a CHAPS payment

Sending a CHAPS payment is simple. Still, the exact steps can change based on your bank or financial provider.

• Check with your bank. Make sure you can send a CHAPS payment online, by phone, or in person.

• Gather the recipient’s details. You’ll need their full name, account number, sort code, and a payment reference (if applicable).

• Submit the payment. If your bank offers online CHAPS, log in and follow the steps. If not, visit a branch or call your bank.

• Receive confirmation. Your bank should give you a receipt or reference number. If you send it before the 5.40pm cut-off, the recipient should get the funds within hours.

Access can differ by bank. Some banks offer CHAPS in online or mobile banking. Others need in-person approval for security, especially for large amounts. If CHAPS isn’t available online and you need a fast option, check whether Faster Payments can handle the transfer instead.

Send and receive CHAPS payments with Airwallex

If you need to send high-value GBP payments and make international transfers, you can manage it all in one place. We’ve partnered with ClearBank to give businesses access to CHAPS, Faster Payments, and Bacs. So, you can pick the right payment method each time, without having to juggle different providers.

With GBP Global Accounts, you get UK-based accounts with local bank details. This makes it easier to send and receive UK payments, and because we also support multi-currency accounts and international transfers, you can handle UK and global payments all in one platform.

We’re also working to offer customers a Confirmation of Payee service through the ClearBank integration. This will help cut fraud risk by checking recipient details before CHAPS transfers are processed. Keep an eye on our blog for updates.

Frequently asked questions (FAQs)

Do CHAPS payments clear immediately?

Yes. CHAPS payments settle in real time on the same business day they’re sent, as long as they’re submitted before the 5.40pm cut-off. Still, “immediately” means same-day, not instant. The funds usually arrive within a few hours. That’s not seconds, like Faster Payments.

Is CHAPS the same as SWIFT?

No. CHAPS and SWIFT are different systems. CHAPS is a UK domestic system for same-day GBP transfers. SWIFT is a global messaging network used for international payments. CHAPS does use SWIFT messaging as part of its process to pass messages between banks. Even so, the two systems have different roles.

Can a CHAPS payment be reversed?

No. CHAPS payments are final and can’t be changed once processed. If you make a mistake, contact your bank straight away and ask for a recall. But there’s a catch: the receiving bank doesn’t have to return the funds. So there’s no promise you’ll get your money back. Always double-check the recipient details before you send.

What’s the difference between CHAPS and Faster Payments?

The main differences are cost, speed, and limits. CHAPS guarantees same-day settlement for any amount, but it costs £20 to £35 per transaction. Faster Payments is near-instant and runs 24/7, including weekends and bank holidays. It’s also usually free or low-cost. However, most banks cap transfers at £1 million. For many high-value payments, Faster Payments is now the better choice, unless you need Bank of England settlement.

Sources and references

1. www.bankofengland.co.uk/payment-and-settlement/chaps