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A short guide to CHAPS business-to-business transactions

We unpack one of the biggest payment schemes in the United Kingdom – CHAPS. Read on to learn about the strengths and weaknesses of CHAPS and how its can be advantageous for businesses.

Mar 25, 2024
min read

What is CHAPS?

The Clearing House Automated Payment System (CHAPS) is a same-day electronic fund transfer system in the United Kingdom widely used for high-value GBP business-to-business (B2B) transactions.

CHAPS is a real-time gross settlement system that allows businesses to transfer funds between bank accounts on the same day. CHAPS uses a sort code, account number and full name to execute transfers and guarantees same-day payment if it is submitted before the bank’s cutoff time, usually, 5:40 pm, depending on the bank.

Advantages of CHAPS

  1. Speed and security

One of the most significant advantages is the speed and security of transactions. CHAPS transactions are processed on the same day, meaning that the recipient can receive the funds on the same day as the transfer is initiated. This can be particularly useful for B2B transactions where time is of the essence. CHAPS payments are also considered very secure as the funds are transferred directly between banks and are protected by robust security measures.

  1. No transaction limits

The CHAPS payment scheme is ideal for high-value B2B transactions, as there are no limits to the amount that can be transferred. This means that businesses can transfer large sums of money quickly and securely without having to worry about limits or restrictions.

  1. Certainty of payment

All payments made through the CHAPS payment scheme are guaranteed, which means that once the payment has been initiated, the funds are guaranteed to be transferred. This can be particularly useful for businesses as it provides them with a high degree of certainty and helps to reduce the risk of non-payment.

Drawbacks of CHAPS

  1. High cost

One of the main disadvantages of the scheme is cost. CHAPS payments can be expensive, with most banks charging a fee for the service. The cost of the transaction is usually higher than other payment methods, on average around 25 GBP, but CHAPS charges vary from bank to bank.

  1. Limited availability

Another disadvantage is limited availability. CHAPS payments are only available during business hours, which may be a limitation for businesses that need to make payments outside of these hours. Additionally, not all banks offer the CHAPS payment scheme, which may limit the number of businesses that can use the system, here is the list of CHAPS participants.

  1. Potential for errors

Rectifying errors on CHAPS payments can be difficult and time-consuming because the funds are guaranteed to be transferred once the payment is initiated, and it is not possible to stop or reverse the payment as with other payment methods. To resolve the issue, the payer or payee will need to work with their respective banks, which can be a lengthy and complicated process, especially for urgent payments.

Ready to try out B2B payments?

Overall, the CHAPS payment scheme is a useful payment system for businesses that need to make high-value GBP B2B transactions quickly and securely in the UK.

Are you looking to access one of the biggest UK and European payment schemes and want to talk B2B payments?

Get in touch with our experts.


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