CHAPS vs BACS: What’s the Difference?

Academy · 10 March 2020Revolut Contributor

If you’re looking to make a bank transfer within the UK, there are a couple of options available to you. However, depending on the size of your transaction and the speed with which you need it to be cleared, a particular system will inevitably be preferable. So, let’s introduce CHAPS vs BACS – the UK’s two biggest domestic bank payment systems.

In this article, we’ll be telling you what they are, how they differ, and which you should be using when. Let’s see what’s what in the battle between CHAPS vs BACS.

What is a BACS payment?

Let’s start with BACS, or Bankers’ Automated Clearing Services, to give it its full name...

BACS is the most commonly used system of payment by businesses in the UK, with an average of 100 million transactions being made per day.

BACS is responsible for all of the Direct Debit and Direct Credit transactions that are made, with transfers enabled directly from bank account to bank account. It is primarily used for lower-value transactions, as it has an upper limit of £250,000 per transfer, whilst transfers are very cheap for the end-user.

Business primarily use BACS to pay employees and suppliers, whilst the UK government pays welfare and pension payments through BACS too. This is because, with BACS, scheduling regular payments is easy – and a lot of payroll software is compatible with BACS as well.

One of the major limitations of BACS is the time it takes to process the transactions. Payments clear in three days – meaning that BACS is not the best option for time-sensitive transactions.

What is a CHAPS Bank Transfer?

CHAPS, or the Clearing House Automated Payment System, on the other hand, is a same-day bank-to-bank transfer system for high-value or time-critical transactions. Like BACS, it is used within the UK for transactions in sterling.

Where BACS is reputed primarily for the ease of regular transfers and for the low cost of its transactions, CHAPS is usually used for large, one-off payments. This is because transactions are relatively expensive, at a cost of £25-£35 each, depending on the bank.

Transactions through CHAPS should be of a sum larger than £10,000. However, there is no upper limit. This makes it the system of choice for financial institutions or large companies making one-off payments. Individuals who are making payments that are time sensitive – such as buying a car or paying a deposit for a house – use CHAPS too.

Where BACS payments take 3 days to clear, CHAPS transactions take only a matter of hours – and the payment should be received on the day it’s made. However, this depends on you meeting the deadline set by the individual bank – as many often take requests for CHAPS payments no later than 3pm.

Further reading: What is a CHAPS Payment?


In a comparison of CHAPS vs BACS, things boil down to two basic differences. These are the costs of the two payment systems and their speed.

Which is Faster, CHAPS or BACS?

As we said, CHAPS is intended to be a faster alternative to BACS, for transactions that need to be processed immediately. As long as you request the transaction between 6am and (usually) 3pm, the transfer will be processed on the same day. This makes CHAPS faster than BACS, which usually takes three days for any transaction to clear.

Which Costs More, CHAPS or BACS?

Because of the higher value and speed of transactions made through CHAPS, costs are usually higher. For the banks themselves to process the payments, the cost is typically £2 to £3. However, users are usually charged anywhere up to £35 for the transaction. BACS transactions are usually free. If there is a fee involved, it’s usually negligible – at most the fee will reach 25p per transaction.

Now we’ve tackled CHAPS vs BACS, you might want to learn the answers to other common banking and money questions. Check out some more of our helpful blog posts below:

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