CHAPS enables Zai customers to make same-day bank to bank transders. Read on to find more about what CHAPS is, how long it takes along with the benefits and disadvantages.

What does CHAPS stand for?

CHAPS stands for Clearing House Automated Payment System. CHAPS can be used to settle GBP transactions within the UK. The CHAPS system is managed by the Bank of England. 

What is a CHAPS payment?

A CHAPS payment is a bank transfer. CHAPS payments are typically used for high-value payments or low value payments that are time sensitive. According to the Bank of England, in the first half of 2022, the average daily volume was 202,429 and the average daily value was £378 billion.

How long does a CHAPS payment take?

A CHAPS payment is received on the same day, provided it is submitted by the bank's cut-off time. CHAPS payment will be received the next working day, if submitted after the cut-off time.

What are the benefits of CHAPS payments?

Usually, CHAPs payments are used for high-value payments or low value payments that are time sensitive. With CHAPS, businesses can expect:

  • Highly secure and efficient way of transfering funds
  • No upper limit to the amount that can be transferred
  • Payments are processed instantly (provided the cut-off time has been met)
  • Ultimate reassurance that payment has been made, as payments cannot be reversed or changed

What are the disadvantages to using CHAPS?

As CHAPS payments can be received on the same day, there are some downsides associated with the payment method. Key disadvantages include:

  • Strict cut-off times.
  • Payments are irrevocable, meaning it can’t be changed or reversed. This provides reassurance the payment is made but can cause difficult if a mistake is made.
  • Payments are much more costly, compared to other bank-to-bank options.

CHAPS v Faster Payments

The Faster Payments System (FPS) also facilitates near real-time transfers between bank accounts in the UK, but operates in slightly different ways. The key differences are:

  • FPS is available 24/7
  • There is a transaction limit (most UK banks cap transactions at £250,000)