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CHAPS and BACS are the UK’s most commonly used payment systems for transferring large volumes of money. They are commonly used between businesses and are also commonly used for small regular payments. Both methods are preferred for their fast clearance and payment scheduling features, which make them ideal for business transactions. However, the two methods have differences and understanding them can help you determine which of them you should use for your money transfer.

What is the CHAPS Payment Method?

The Clearing House Automated Payment System (CHAPS) is a same-day bank-to-bank money transfer system for time-sensitive high-value transactions. This payment method only transfers Sterling within the UK, and this limitation allows it to transfer large amounts quickly.

The system is often used for large one-off payments partly because each transaction is relatively expensive compared to the BACS system. The exact charge per transaction can vary depending on the institutions involved, but it is usually around £30.

Although the CHAPS system is quick and efficient, it can be expensive if your business makes many small transactions. However, there is no ceiling to how much you can transfer through the system. Because of its same-day delivery, CHAPS is preferred by organisations looking to make massive one-off transfers. With CHAPS, the payment only takes a few hours to clear. Individuals or small businesses might prefer it for large incidental payments such as buying new vehicles or equipment.

While CHAPS is a same-day payment method, some banks may not accept the payment later than 3 pm, rendering the same-day delivery void. They will only process the payment the next day.

What is the BACS Payment Method?

The Bankers Automated Clearing Services (BACS) is one of the UK’s most popular bank transfer methods, executing about 100 million transactions daily. It is the same process used to make direct debit or credit transactions. With BACS, you can safely transfer money directly between bank accounts, and it is mostly used for smaller transactions such as monthly wages being paid to employees, payments to suppliers and debt repayments.

The government also uses the BACS system to credit welfare and pension payments because of its payment scheduling feature.

Unlike CHAPS, BACS is meant for use with lower-value transactions and enforces a transaction limit of £250,000 per unique transfer. The transaction fees on this system are low compared to CHAPS, and you can expect to pay anywhere between 5p and 50p for a BACS transfer. However, banks might have additional fees.

Differences Between BACS and CHAPS

BACS and CHAPS payments are both available in the UK. But even from the description, you can tell there are differences between the payment methods that make each preferable in various circumstances.


The processing speed of BACS and CHAPS payment methods varies. If time is of the essence, CHAPS is the faster option. Payments are processed and cleared on the same working day as long as they are initiated before your bank’s specified cut-off time. The payment will be processed on the next business day if you miss the cut-off time.

BACS, on the other hand, is less time-sensitive than CHAPS. The payments take 3 working days to process and are transparent, making it a slower option than CHAPS. However, the processing time for BACS payments also varies depending on several factors, including the banks involved, the time of day the transaction is initiated and any intermediary banks. The period it takes to complete the BACS transfer is as follows:

Day 1

On the first day, BACS requires you to submit the file directly to the system between 7 am and 10:30 pm. For Access customers uploading payments to DDCMS and not directly to BACS, the deadline is noon on the payment submission deadline date provided.

Day 2

The file is delivered to the recipient’s bank and processed.

Day 3

Money is collected from the sender’s account, and the recipient is credited if sufficient funds are available.

Several factors must be considered when determining the length of a BACS payment. If you collect direct debits yourself, it’s crucial to understand the factors that could increase processing time, such as submitting a file to the system after 10:30 pm.


Another difference between the two payment methods is cost. BACS is a much cheaper way of transferring money between banks than CHAPS. The cost of sending money using BACS can be anywhere between 5p and 50p per transaction, and it is free to receive money on this platform.

CHAPS is more expensive because your bank has to pay for the software and hardware needed to complete the transfer. The cost of transferring money using CHAPS is between £25 and £35 per transaction. These prices may vary slightly depending the bank or financial institution handling the transfer. For accurate prices, it’s best to contact your bank or financial institution to confirm the exact cost of the transfer.

Refund Policy

Both methods allow for refunds. However, the process and timeline may differ based on the specific bank or financial institution involved.

Before sending the payment with either option, you should confirm the refund policy and procedures of your bank or payment provider.

Refunds through BACS may take a few business days to process, while refunds on CHAPS can be processed faster due to its real-time transfer capability. However, it’s essential to note that refunds via CHAPS may come with additional fees.

While refunds are possible with both options, it’s worth noting that cancelling a CHAPS payment is not easy once it’s made because of the fast processing and recalling the funds is not always possible.


BACS and CHAPS have requirements to be met to use the systems. For BACS transactions, businesses typically must have a UK bank account, a sort code and an account number. The company must also have access to online banking or specialised software to initiate the BACS transaction. The firm must also be registered with BACS and have a Service User Number (SUN).

For a CHAPS transfer, you must have a UK bank account that accepts this type of transaction and sufficient funds to cover the transaction amount and the associated fees. If you meet these requirements, you can pay CHAPS by visiting the bank branch or online banking.

Transaction Limits

Both methods have different limits in. It allows you to transfer as much as possible as long as you have enough funds in your account. However, some banks may have their own limits, so it is important to check with your bank to see if they have any restrictions in p

On the other hand, APS has a £250,000 minimum limit but no official upper limit. Still, some banks may impose their maximum limit, so it is essential to check with your bank before initiating the transfer to determine if a limit is in place.


Availability refers to the times of operations and accessibility of both payment methods. Both BACS and CHAPS operate on business days only. Both work over the weekend and on public and bank holidays in the UK.

On business days, BACS is available from 7 am to 10:30 pm, while CHAPS is available from 6 am to 6 pm. You can access both payment methods by visiting the bank or initiating the transfer online.

Adoption by Banks

BACS and CHAPS are popular payment systems with decent adoption from banks and financial institutions in the country. About 30 mainstream UK banks support BACS, while CHAPS also has 30 banks as direct participants, which more than 5,000 agencies further use. Correspondent banks rely on direct participant banks to make CHAPS payments and transfers.


BACS and CHAPS are safe and secure payment systems in the UK. There is little to choose from either option when it comes to security. The UK’s legal, compliance and regulatory agencies and financial watchdog institutions regulate and monitor both options. They have to comply with strict standards to ensure the safety of customer information and funds. Additionally, customers do not directly interact with the system, which reduces chances of fraud and unauthorised access. You can only make payments via BACS or CHAPS using your bank.

When to Use BACS or CHAPS

The choice of the best payment method between BACS and CHAPS depends on several factors, including the value of the transactions, the processing speed required, and the cost.

When to use BACS

BACS is an excellent choice for low- to moderate-value recurring but non-time-sensitive payments. You can use this payment method to pay bills, receive salary, and make pension payments.

Since the cost of using the payment method is almost negligible and goes down as you make more transfers, BACS is perfect for regular payments and transfers.

However, before settling on the BACS payment system, you should consider that it takes three working days, which is not a great option if you need to make urgent payments or money transfers.

When to Use CHAPS

CHAPS is a more suitable option for high-value transactions. It provides same-day processing and is specifically designed for high-volume payments.

Although CHAPS has a shorter processing period, it has a high transfer fee. Additionally, the fees vary by bank, so check with your bank for their applicable charges for sending CHAPS payments.

Given the fee, CHAPS is more suitable for high-volume transactions that justify the fee, such as FX transactions, large tax payments, housing and real estate transactions, and big insurance payments. This is why businesses and organisations usually do CHAPS.


CHAPS and BACS are the two leading payment methods in the UK. Each option offers different pros and cons, and choosing the right one can significantly impact how much you pay and how efficiently the funds are delivered. It’s important to consider the merits and demerits of each payment method to ensure you pick the most practical one for your needs.  



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