In this guide, we'll explain what CHAPS payments are, when to use them, how they impact your business finances, and where they sit compared to other B2B payment methods like Faster Payments, BACS or BNPL.
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CHAPS payments offer a way to move high-value funds securely and on the same day, making them essential for time-critical business transactions.. However, CHAPS comes with downsides: high fees, rigid cut-off times, and a lack of flexibility for businesses trying to manage cash flow. Whether you're paying suppliers, moving funds, or closing a major deal, there are moments having fast, reliable B2B payments is a must.
CHAPS (Clearing House Automated Payment System) is a same-day payment service used for transferring large sums within the UK in pounds sterling. It is operated by the Bank of England and supports high-value, time-critical payments, both for businesses and individuals.
Unlike standard bank transfers, CHAPS transactions are settled individually in real-time, making them irrevocable once completed. Payments can be arranged either online (if your bank allows) or by visiting a branch — provided you meet the necessary identity checks.
The CHAPS system is open Monday to Friday between 6am and 6pm, although most banks impose earlier cut-off times for customers.
It’s worth notice however that for most businesses, CHAPS will not be their only, or even main, payment option. The limitations and cost involve mean that for day-to-day payments, other options may be more useful, or offer extra benefits such as B2B Buy-Now-Pay later (B2B BNPL)
CHAPS is ideal when timing is non-negotiable. Businesses commonly use it for:
Compared to methods like BACS or Faster Payments, CHAPS guarantees that high-value transfers land when they need to, reducing risk around contract penalties or delays.
However, for many supplier or partner transactions, same-day bank-to-bank payment can also be achieved without fees or administrative costs by using direct instant transfer options like Pay Now, which offers faster settlement without the cost of CHAPS.
For everyday payments or lower-value transactions, CHAPS is often too expensive to justify, especially when services like Faster Payments are free or low-cost.
CHAPS payments clear the same day they are made, provided they are submitted before your bank’s cut-off time.
Typical bank cut-off times include:
If you miss the cut-off, the payment will clear on the next working day.
CHAPS payments typically cost between £20–£30 per transaction, depending on your bank.
Some examples:
While the fees can add up, they are usually justifiable when the payment’s timing is critical, the sum is high, or when it’s necessary to meet supplier terms or avoid late penalties.
Before choosing CHAPS, always weigh:
In practice, CHAPS wins for urgency and large sums, while BACS is suited for regular, non-urgent payments like supplier trade payables and Faster Payments suits quick, lower-value transactions.
Faster Payments has a limit (usually £1M); CHAPS allows unlimited amounts with same-day guaranteed settlement, making it safer for very high-value transactions.
When it comes to cash flow, CHAPS payments are a balancing act.
Used strategically, CHAPS can help maintain strong supplier relationships, avoid late penalties, and lock in deals that rely on prompt payment. However, frequent use of high-cost CHAPS transfers can also cut into your cash reserves and margins
Yes. While CHAPS ensures fast settlement, the high transaction fee (around £20–£30) can impact your margins if used frequently. Alternatives like iwocaPay can help you send large sums without fees, and even spread the cost of your payment up to £30,000 over 3 or 12 months.
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While CHAPS has no upper transaction limit, it does carry some operational risks:
Yes. CHAPS is operated by the Bank of England, using SWIFT secure messaging, and is considered one of the safest payment systems available.
Most high street and online banks allow CHAPS payments via:
You will typically need:
Remember to check your bank’s cut-off time and fee structure in advance.
While the process is straightforward, the limitations can be an issue for scaling or shaping your customer experience. For high volume operations, online transactions through a b2b payment gateway could be more efficient for scaling.
Managing payments isn't just about moving money quickly — it's about protecting your cash flow, building supplier trust, and giving your business room to grow. Whether you're making a one-off high-value payment or managing regular supplier accounts, the right payment method can make a significant difference.
CHAPS payments are essential for sending very large sums urgently and securely. But today, businesses have more flexible options that better match real-world cash flow needs.
By choosing a payment method that fits the timing and scale of each transaction, whether that's CHAPS, Pay Now, or Pay Later, you can keep your business moving, confident, and cash flow strong.
For B2B businesses who want to get paid instantly while offering flexible payment terms.
For trade customers who want to increase their purchasing power while keeping control of their cashflow.
