CHAPS Payments Guide for Businesses in the UK

In the dynamic landscape of UK business operations, a seamless and efficient payment system can make all the difference. This is where CHAPS steps in.

CHAPS isn't just another payment system; it's a real-time gross settlement (RTGS)¹ solution designed for swift and secure transfers of substantial sums of money between UK bank accounts. Renowned for its speed and reliability, CHAPS is the preferred choice for high-value transactions and time-sensitive financial dealings.

If you're a UK-based business seeking to navigate the world of CHAPS payments, you've arrived at the right starting point. In this comprehensive guide, we'll discuss what is a CHAPS payment system, clarify the process, and explore how it can elevate your business operations.

What is a CHAPS payment?

CHAPS, short for Clearing House Automated Payment System, operates within the United Kingdom. It facilitates the swift transfer of large sums in British pounds.

This system is a same-day sterling solution, accommodating high-value wholesale payments and urgent lower-value transactions like property purchases or deposits. The responsibility for overseeing the CHAPS system has been with the Bank of England since 2017.

UK businesses find CHAPS especially useful for managing significant, time-critical transactions such as supplier payments or settling tax obligations. In addition, solicitors and conveyancers frequently employ CHAPS to ease the seamless completion of housing and property transactions.

In summary, CHAPS payments serve the following essential purposes:

• Corporate Usage:
  Corporations rely on CHAPS for executing high-value and time-critical payments. These may include payments to suppliers or fulfilling tax obligations promptly.

• Legal and Property Transactions:
  Solicitors and conveyancers frequently employ CHAPS for the seamless completion of housing and other property transactions. It guarantees secure and swift fund transfers.

• Individual Transactions:
  On an individual level, people may opt for CHAPS when making significant purchases, such as buying a car or placing a deposit on a house. CHAPS ensures the safe and timely transfer of funds for such high-value acquisitions.

Is CHAPS payment instant?

This is a question in the minds of most users. So, let's clarify the transaction speed of CHAPS payments.

Instant payments are those that happen within mere seconds. On the other hand, CHAPS offers a same-day payment service, which means the transfer occurs on the same day the request is made.

In most cases, CHAPS payments do happen swiftly, but they are designed to guarantee same-day arrival. It's worth noting that if you submit a CHAPS payment after your bank's cutoff time, it won't be clear until the following business day.

In contrast, instant payments are electronic transfers processed within mere seconds. They're tailor-made for immediate access to funds for the recipient and solid assurance of payment for the sender. While CHAPS payments are indeed same-day, they might not be as lightning-fast as instant transactions.

CHAPS payment limit

Regarding CHAPS payment limits, there's no upper limit on the amount that can be transferred. This flexibility proves invaluable for UK businesses, especially in scenarios demanding substantial and time-sensitive payments, such as settling bills with suppliers or meeting tax obligations.

Cost of CHAPS payment

Banks in the UK can charge different fees to process a CHAPS payment. Still, they are usually more expensive than regular payments.

Here is a table with the cost of CHAPS payments for some of the biggest UK banks:

Bank	CHAPS payment fee
Santander	£25²
Barclays	£15³ - for business banking customers.
HSBC	£12 - £17⁴ - depending on the type of account (HSBC or HSBC customer)
Lloyds	£30⁵
Royal Bank of Scotland	£20⁶

How to make a CHAPS payment

A CHAPS transfer operates through an automated payment system managed by participating banks. CHAPS Clearing Company Limited, owned by the Bank of England, is a central hub overseeing all CHAPS payments.

• To initiate a CHAPS transfer, the sender must provide their bank with the recipient's bank details, including the sort code and account number.
• Subsequently, the sender's bank dispatches the payment instructions to CHAPS Clearing Company Limited, which relays these instructions to the recipient's bank.
• The recipient's bank proceeds to credit the funds into the recipient's account.

Typically, these funds become available on the same day, although there might be slight delays if the payment occurs later in the day or if any issues arise during the transfer process.

Wise Business: alternative to local and international payments

Wise Business is your savvy choice for handling local and international payments for your UK-based company. It's an online multi-currency account designed to make your financial life smoother, offering the real mid-market exchange rate that helps you save big while you send and receive money worldwide.

Whether you need to settle invoices, purchase inventory, or manage payroll in over 70 countries, Wise Business has covered you.

Here are some of the standout features that Wise Business brings:

• Local Account Details:
  You can obtain local account details in 9 different currencies, making it easier to do business internationally.

• International Payments:
  Say goodbye to hidden fees and sneaky exchange rate markups. Wise Business ensures your international payments are straightforward and cost-effective.

• Business Debit Cards:
  If you're a globetrotting business, Wise Business offers debit cards that allow you to spend abroad without worrying about foreign currency transaction fees.

• Seamless Integration:
  Wise Business can seamlessly integrate with your preferred accounting software, simplifying financial management.

• Batch Payments:
  Need to pay up to 1000 people in one go? No problem. Wise Business makes batch payments a breeze.

• Multi-user Access:
  You can grant bespoke access to your team, ensuring everyone has the right level of access and control.

In a nutshell, Wise Business is the ideal choice for UK businesses seeking an efficient, cost-effective, and user-friendly solution for their local and international financial transactions. It's a game-changer that can help you save time and money while expanding your business internationally.

Get started with Wise Business 🚀

In summary, CHAPS is a vital RTGS solution in the UK for secure money transfers. It caters to businesses, individuals, and legal transactions, offering same-day payments. There's no upper limit on transfers, making it versatile for substantial transactions. However, fees vary among banks.

To make a CHAPS payment, provide recipient details to your bank, and funds are credited the same day. Alternatively, consider Wise Business for cost-effective international transactions with features like local account details, seamless integration, and business debit cards. Wise Business is a game-changer for efficient and economical financial operations.

Sources used in the article:

1. RTGS Renewal Programme | Bank of England
2. CHAPS payments | Santander UK
3. CHAPS payments | Barclays
4. What Is A CHAPS Payment? | CHAPS Transfers – HSBC UK
5. Pay by CHAPS | Payments and transfers | Lloyds Bank
6. How can I make a CHAPS payment?

Sources last checked September 15, 2023