CHAPS Payment: All You Need to Know

CHAPS, short for Clearing House Automated Payment System, provides a secure and efficient way to make large-value payments in the UK. It operates on a real-time gross settlement (RTGS) basis, which means that each payment is settled individually and immediately, without any netting or batching of payments. This ensures that payments are processed quickly and efficiently, with minimal risk of payment failure or fraud.

CHAPS is a UK-based payment system that allows large-value payments to be made between banks and other financial institutions. It was established in 1984 and is owned and operated by the Bank of England. CHAPS is used for a variety of payment transactions, such as house purchases, business payments, and high-value personal transfers.

How to use CHAPS payment

To use the Clearing House Automated Payment System, you will need to follow these steps:

1. Open a bank account: You must have a bank account with a bank that is a member of the CHAPS scheme.
2. Provide payment details: Provide the details of the recipient’s account, including the account number and sort code, and the amount you wish to transfer. You may also need to provide additional information, such as the recipient’s name, address, and bank details if the transfer is to an international account.
3. Initiate the payment: You can initiate the payment by either visiting your bank in person, calling your bank or using online banking. You will need to provide your bank with the payment details.
4. Verify the payment: Your bank will verify the payment details and send the payment instruction to CHAPS. CHAPS will then verify the details and send the payment to the recipient’s bank.
5. Confirm receipt: Once the payment has been processed, the recipient’s bank will credit the payment to the recipient’s account. The recipient should then confirm that they have received the payment.

To make a CHAPS payment, a customer must have an account with a bank that is a member of the CHAPS scheme. They then instruct their bank to make a CHAPS payment, providing details of the recipient’s account and the amount to be paid. The customer’s bank sends instructions for a CHAPS payment, which verifies the details and sends the payment to the recipient’s bank. The recipient’s bank then credits the payment to the recipient’s account.

Which Currencies are accepted?

Clearing House Automated Payment System payments can be made in sterling or in a range of foreign currencies, including US dollars, euros, and Japanese yen. However, not all banks that are members of the CHAPS scheme are able to process foreign currency payments, so customers should check with their bank before making a CHAPS payment.

The fees for using CHAPS vary from bank to bank payments depending on the bank and the type of payment being made. Typically, CHAPS payments cost more than other forms of payment, such as BACS or Faster Payments, because they are processed on a real-time basis and involve a higher level of security and risk management.

Who should use this payment?

Clearing House Automated Payment System benefits both individuals and businesses who need to make high-value, time-critical payments.

Individuals who may benefit from using CHAPS include those who need to make large payments, such as for property purchases or investments, or for urgent payments where time is of the essence, such as in emergency situations.

Businesses also benefit from using CHAPS, particularly those that require immediate access to funds, such as companies involved in the stock market or financial services. CHAPS can also be useful for companies that need to make large payments, such as for international trade or business acquisitions.

In addition to providing a fast and reliable payment system, CHAPS also offers a high level of security and risk management. This can help to prevent payment fraud and other types of financial crime, which can be particularly important for businesses that handle large amounts of money.

Benefits of using CHAPS payment

One of the key benefits of CHAPS is its speed and reliability. Payments made using CHAPS are settled immediately, which means that funds are available to the recipient almost instantly. This is particularly important for high-value payments, such as house purchases, where delays can have serious financial consequences. CHAPS also provides a high level of security and risk management, which helps to prevent payment fraud and other types of financial crime.

Another benefit of CHAPS is its flexibility. Payments can be made in sterling or in a range of foreign currencies, and there is no limit on the amount that can be transferred. This makes CHAPS an ideal payment method for businesses and individuals who need to make large-value payments, either domestically or internationally.

However, there are some limitations to using CHAPS. Firstly, not all banks are members of the CHAPS scheme, which means that some customers may not be able to use it to make payments. Secondly, the fees for using CHAPS can be high, particularly for smaller payments, which may make it less attractive to some customers. Finally, CHAPS payments can only be made during certain hours of the day, which means that customers may need to plan their payments in advance.

Clearing House Automated Payment System is a secure and efficient way to make large-value payments in the UK. It operates on a real-time gross settlement basis, which ensures that payments are processed quickly and efficiently, with minimal risk of payment failure or fraud. CHAPS payments can be made in sterling or in a range of foreign currencies, and there is no limit on the amount that can be transferred.

Real-world example 

For example, if you were purchasing a house in the UK, you would need to transfer a large sum of money to the seller’s solicitor trust company in order to complete the transaction. This transfer would typically be processed using the CHAPS system, which would ensure that the funds are transferred securely and in real-time, providing both parties with immediate confirmation of the transaction.

Another example of using the CHAPS system would be for large international transactions, such as corporate payments or foreign exchange transactions. In these cases, the CHAPS system can be used to transfer large sums of money between banks and financial institutions in different countries, providing a secure and efficient means of settling high-value transactions.

Who uses CHAPS?

According to the Bank of England, “Direct participants in CHAPS include the traditional high-street banks and a number of international and custody banks. Many more financial institutions access the system indirectly and make their payments via direct participants. This is known as agency or correspondent banking.”

CHAPS Direct Participants

Banco Santander, S.A. (London branch)
Bank of America N.A. (London branch)
Bank of China Limited (London branch)
Bank of England
Bank of New York Mellon (London branch)
Bank of Scotland plc (part of the Lloyds Banking Group)
Barclays International (a trading name of Barclays Bank plc, part of the Barclays Group)
Barclays UK (a trading name of Barclays Bank UK plc, part of the Barclays Group)
BNP Paribas SA (London branch)
Citibank N.A. (London branch)
ClearBank Limited
CLS Bank International (an Edge Act Bank based in New York)
Clydesdale (a trading name of Clydesdale Bank plc, part of the Virgin Money UK PLC Group)
Danske Bank (a trading name of Northern Bank Limited, part of the Danske Bank Group)
Deutsche Bank AG (London branch)
Elavon Financial Services DAC (UK branch)
Euroclear Bank SA/NV (Brussels Head Office)
Goldman Sachs Bank USA (London branch)
Handelsbanken plc (a UK subsidiary of Svenska Handelsbanken AB)
HSBC Bank plc (part of the HSBC Group)
HSBC UK Bank plc (part of the HSBC Group)
iFAST Global Bank Limited
ING Bank N.V. (Amsterdam Head Office)
J.P. Morgan Chase Bank N.A. (London branch)
LCH Limited
Lloyds Bank plc (part of the Lloyds Banking Group)
National Westminster Bank plc (part of the NatWest Group)
Northern Trust Company (London branch)
Royal Bank of Scotland plc (part of the NatWest Group)
Santander UK plc (part of the Banco Santander Group)
Societe Generale (Paris Head Office)
Standard Chartered Bank plc
State Street Bank and Trust Company (London branch)
The Co-operative Bank plc
TSB Bank plc
UBS AG (London branch)
Virgin Money (a trading name of Clydesdale Bank plc, part of the Virgin Money UK PLC Group)

PayAlly gives you the tools to transfer your money globally. Our financial experts will find the ideal payment strategy for your business. Speak to us about your CHAPS needs.