If you need to be able to take high-value payments in super-quick time, then CHAPS could be a good solution for your business. But you need to be aware of the limitations and risks of this, as with all payment methods.
CHAPS or “Clearing House Automated Payment System,” is a bank transfer where there is no limit as to how much money can be sent. Payments made via CHAPS are usually over £10,000 in value.
Payments can be made within one working day which is handy if you want to offer quick delivery times or need to deliver a service to a short time frame.
In fact, if the transfer is made before a specific time on a working day, it is guaranteed to be completed on that same day. You’ll need to check with your bank as to what their payment cut off time is.
The process is straightforward too. Customers will need to instruct their bank to make the payment to your account, so will need your bank account and sort code information. They can do this in person or online.
One of the reasons CHAPS is used for high-value payments is because banks charge a relatively higher fee for each transfer. At around £25 per transaction or more, it’s an expensive way to make frequent, lower-value payments.
If you require the payment to be made on the same day, the cut-off time is very strict with no flexibility so it’s a good idea to check in advance with the bank making the payment as to their deadline.
And because of the speed at which payments take place, remember that it can be very difficult to cancel a payment or recall the funds if you make a mistake.
Other payment types
CHAPS payments are often confused with Bacs payments or other bank transfers, but there are key differences between them. (Read our new and simple guide to Bacs and Bacs payments here).
Similar to CHAPS payments there is an alternative automated payments system that is simpler and more streamlined. To find out more speak to London & Zurich today on 0121 234 7999.