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.
In this guide, we explain everything you need to know about CHAPS payments.
What does CHAPS stand for?
CHAPS stands for Clearing House Automated Payment System.
When was CHAPS established?
CHAPS was established in 1984 by the Bankers Clearing House in London, but throughout its history, the CHAPS system has been operated by many different companies, until the Bank of England overtook this responsibility in 2017.
What is it exactly?
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.
What are the benefits of using CHAPS?
- Quick : 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.
- Easy process : the process is very straight forward with customers instructing their bank to make the payment to your account either in person or online.
What is the cost of using CHAPS?
One of the reasons CHAPS is used more 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.
Are there any restrictions to using CHAPS?
- Deadline for submission : 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.
- Cancellation can be difficult : And because of the speed at which CHAPS payments take place, it can be very difficult to cancel a payment or recall the funds if you make a mistake.
CHAPS vs Bacs
Bacs is another type of bank transfer, but unlike CHAPS and Faster Payments (which are instant or on the same day), Bacs can take up to three days to clear. To find out more about Bacs, check out our guide.
To find out how London & Zurich can help you with your regular payments, speak to London & Zurich today on 0121 234 7999.