What are CHAPS payments? And how do they work?

If you’ve ever bought a home in the UK, you’ve likely used CHAPS, although you might not have known it at the time. The Clearing House Automated Payment System (CHAPS) enables same-day, high-value GBP transfers within the UK. Businesses and banks use it for property purchases, corporate transactions, and interbank payments.

CHAPS is operated by the Bank of England and processes each payment individually in real time. While CHAPS is still the best option for certain transactions, faster and more cost-effective alternatives are now available.

This guide explains how CHAPS works, who uses it, and what other options exist.

What are CHAPS payments?

CHAPS payments are processed individually in real time through the Bank of England’s settlement system, ensuring immediate and irrevocable transfer of funds. Unlike many other payment methods, CHAPS has no upper transaction limit, making it ideal for urgent, high-value transactions such as:

• Corporate payments to suppliers and business partners

• Interbank settlements between financial institutions

• Property purchases, including mortgage and deposit transfers

Introduced in 1984, CHAPS was designed to provide a faster, more reliable alternative to traditional bank transfers. In 2017, it came under Bank of England control.

CHAPS is huge in value but small in transaction count. It's a system designed for quality (high-value, time-sensitive payments) over quantity (everyday banking transactions).

While only a small fraction of UK transactions go through CHAPS, the payments that do are very large, such as multi-million-pound corporate settlements or interbank transfers.  

How do CHAPS payments work?

CHAPS payments clear individually, in real-time, through the Bank of England’s settlement system. This means no delays or batch processing. Each payment is final the moment it’s approved.

Here’s how that works:

1. The sender requests a CHAPS payment through their bank. This can be done online, in-branch, or via a corporate banking platform.

2. The bank verifies funds and details, ensuring everything is correct.

3. The payment is sent via the SWIFT network and submitted to the Bank of England for approval.

4. The receiving bank gets the funds and releases them to the recipient on the same day.

Read more: Digital Payments: What are they and how do they work?

How to make a CHAPS payment

Making a CHAPS payment is simple, but the process varies depending on your bank or financial provider. Some banks allow CHAPS payments online, while others require you to visit a branch or call their customer service.

Step-by-step: How to send a CHAPS Payment

1. Check with your bank. Confirm whether you can make a CHAPS payment online, by phone, or in person.

2. Gather the recipient’s details. You’ll need:

• Full name

• Account number

• Sort code

• Payment reference (if applicable)

1. Submit the payment. If your bank allows online CHAPS transfers, log in to your account and follow the instructions. Otherwise, visit a branch or call your bank to process the transaction.

2. Receive confirmation. Your bank should provide a receipt or reference number. The recipient should receive the funds within hours if sent before the cut-off time.

Where can you make a CHAPS payment?

You can send a CHAPS payment through any UK bank or financial platform that offers CHAPS services, including:

• Online or mobile banking (if supported by your bank)

• In-person at a bank branch (typically required for large transfers)

• By phone (for business and private banking customers)

Can you make a CHAPS payment online?

Some banks support CHAPS transfers online via their business or personal banking platforms.

Most high-street banks require in-person authorisation for security reasons, especially for large transactions.

If online CHAPS payments are available, they are usually found under "Payments & Transfers" in your online banking portal.

If CHAPS is not available online and you need a fast alternative, check if Faster Payments can handle your transaction instead. It’s often cheaper and quicker.

Are CHAPS payments only possible via a bank?

No, some financial platforms offer them, too. Airwallex has partnered with ClearBank, giving customers access to CHAPS payments alongside Faster Payments and Bacs. This integration allows businesses using Airwallex to send and receive high-value, same-day GBP payments within the UK banking system.

Simple access to CHAPS

Businesses can now initiate CHAPS transfers through Airwallex, with same-day settlement for urgent, high-value transactions.

Virtual business accounts

Airwallex provides UK-based GBP accounts and IBANs, making it easier to process CHAPS payments under your company’s own branding.

Confirmation of payee (CoP) integration

Airwallex is working to provide customers with a Confirmation of Payee service, through the ClearBank integration, which will reduce fraud risks by verifying recipient details before processing CHAPS transfers. Keep an eye out on our latest release notes on our blog for more information in the future. 

Operating hours and cut-off times

• CHAPS runs from 6.00am to 6.00pm (UK time), Monday to Friday (excluding public holidays).

• Banks must be ready to receive CHAPS payments by 8.00am and send them by 10.00am.

• For customer payments, the deadline is 5.40pm.

• If a payment is made after these cut-off times, it will go through the next working day.

How much does a CHAPS payment cost?

CHAPS is one of the most expensive payment methods in the UK, which is why it is only used when same-day settlement is required.

• Most banks charge between £20 and £35 per transaction.

• Some premium business accounts offer discounted or waived CHAPS fees for frequent users.

• CHAPS Direct Participants (banks and financial institutions) have to pay additional annual fees and per-transaction costs to access the system.

Because of its high fees, CHAPS is not the default choice for businesses or individuals making large payments. Faster Payments is increasingly replacing CHAPS for many high-value transactions, offering near-instant settlement at a fraction of the cost. However, CHAPS remains the preferred option when absolute certainty and same-day settlement are required.

Advantages and disadvantages of CHAPS payments

Advantages

• Guaranteed same-day settlement. No waiting, no delays.

• No transaction limit. Move as much money as needed.

• Highly secure. The Bank of England handles settlement.

Disadvantages

• Expensive. Costs more than Faster Payments or Bacs.

• Limited availability. Only works on business days within specific hours.

• Irreversible. If a mistake is made, it cannot be undone.

Who uses CHAPS payments?

For the most part, CHAPS is used for high-value, time-sensitive transactions needing same-day settlement. Those transactions tend to be made by:

Banks and financial institutions

Banks and financial institutions are among the biggest users of CHAPS. They use it to:

• Settle interbank payments. Banks need to transfer large sums between each other for lending, borrowing, and managing liquidity.

• Process foreign exchange transactions. Currency exchanges between financial institutions often require same-day settlement, making CHAPS a reliable choice.

• Manage large-scale financial settlements. Investment firms and trading platforms use CHAPS to clear transactions efficiently.

Large businesses

Corporations rely on CHAPS when they need absolute certainty that a payment will arrive the same day. Common use cases include:

• Supplier payments. Businesses making high-value purchases, such as raw materials or machinery, often use CHAPS to pay suppliers promptly.

• Tax payments. Large corporations use CHAPS to meet tax obligations without delays.

• Corporate treasury transfers. Companies managing large cash reserves or distributing funds between different bank accounts may use CHAPS to avoid processing delays.

Real estate

CHAPS plays an important role in the UK property market, ensuring that home purchases and commercial real estate transactions go through securely.

• Buying and selling property. Solicitors and conveyancers use CHAPS to transfer funds between buyers, sellers, and mortgage lenders.

• Mortgage repayments and deposits. Lenders and buyers rely on CHAPS to ensure payments reach the right accounts before deadlines.

• Commercial real estate deals. Large-scale property purchases often require CHAPS due to the high transaction values and the need for immediate clearance.

Individuals making large purchases

While CHAPS is mainly used by businesses and banks, some people also use it for important personal transactions, such as:

• Buying high-value assets. Some car dealerships, yacht brokers, and auction houses accept CHAPS for fast and secure payments.

• Transferring large sums. If someone needs to send a high-value payment that exceeds the limit for Faster Payments, CHAPS is a secure option.

• Settling private property purchases. Individuals buying a home without a mortgage or making large down payments may use CHAPS to ensure the transaction completes on the same day.

CHAPS vs. other UK payment systems

The broader UK payment infrastructure is managed by Pay.UK, which oversees the systems used for most everyday transactions.

CHAPS processes far fewer transactions than these other payment systems. Faster Payments and Bacs handle millions of lower-value payments daily, including personal bank transfers, direct debits, and payroll. 

Read more: CHAPS vs. Bacs: What’s the difference?

While CHAPS remains essential for certain high-value payments, its role is evolving. Faster Payments now supports larger transactions, offering a faster and cheaper alternative for many businesses. As a result, fewer companies are relying on CHAPS for routine high-value transfers.

Here’s how CHAPS compares to other major UK payment systems.

Faster Payments

One of the closest alternatives to CHAPS is Faster Payments, which has gained popularity among both consumer and business transactions. 

This system allows money to move almost instantly and supports payments of up to £1 million in many cases. 

Unlike CHAPS, which only operates on business days, Faster Payments runs 24/7, including weekends and holidays. As a result, many businesses now prefer Faster Payments for high-value transfers that do not require direct settlement through the Bank of England.

Bacs  

For routine payments like payroll and supplier invoices, many businesses use Bacs. This is the UK’s oldest payment system, widely used for direct debits and bulk transactions. 

However, Bacs payments take two to three business days to clear, making them unsuitable for urgent transfers. 

Bacs processes transactions in batches rather than individually, meaning that payments are grouped together and settled at the same time.

Did you know? When Bacs (Bankers' Automated Clearing Services) first launched in 1968 in the UK, the payment instructions were initially stored on magnetic tapes, which were essentially cassette tapes. These tapes contained payment details and were physically transported between banks to process transactions.

SWIFT

For international transactions, businesses use SWIFT, a global messaging network that connects banks worldwide. 

SWIFT does not directly move money. Instead, it sends secure payment instructions between financial institutions. 

Transfers sent via SWIFT typically take one to five business days to complete, depending on the destination and the banking network involved. 

Unlike CHAPS, which is limited to UK transactions, SWIFT is designed for cross-border payments.

Read more: What is the SWIFT banking and payment system? How it works in 3 steps

Is CHAPS still the best option?

CHAPS is a trusted and secure way to transfer large sums quickly, but high costs and rigid cut-off times mean it’s often not the best choice. Many businesses are switching to Faster Payments, which can now handle large transactions almost instantly and at a lower cost.  

If your business needs a cost-effective way to send high-value payments within the UK or internationally, Airwallex offers secure, flexible, global payment solutions that make transfers faster and more efficient.

Through its partnership with ClearBank, Airwallex offers access to Faster Payments, Bacs, and CHAPS. It also offers multi-currency business accounts, high-speed international transfers, automated accounts payable and global payments acceptance via checkout integrations, payment links, and platform APIs.

Sources:

www.bankofengland.co.uk/payment-and-settlement/chaps