Difference between CHAPS and Faster Payments

When looking at CHAPs and the Faster Payments service, it pays to make the right decision. Cost is one of the key factors when choosing between these two methods of sending money to a recipient’s bank account. 

Business efficiency is another point to take into account when looking at recurring bank transfers or one-off payments. To make the right decision, we need to look in depth at these payment types and how they work.

What is CHAPS?

The question of what a CHAPS payment is is easy to answer. It is the Clearing House Automated Payment System, used for same-day, high-value sterling payments between banks and building societies in the UK.  

It’s highly regarded as a way to receive quick payments safely, particularly for large amounts. It means that it’s typically used for the likes of house purchases and big business transactions. 

This method of sending cash uses a real-time gross settlement approach with no transaction limit. Banks tend to charge between £25 and £30 for bank transfers over this system, making it secure, fast, but relatively expensive.  Payments can only be sent during banking hours from Monday to Friday, which means that it doesn’t suit every industry.

What are Faster Payments?

The Faster Payments service was launched in 2008 as a way of making almost instant payments. Bank transfers using the Faster Payment system arrive at the receiving bank account in a matter of seconds or minutes.     

This method of sending real-time payments has an upper limit of £1 million each time. Fees are either low or waived, with availability 24/7/365 to enable businesses to send money between banks at any time. 

CHAPS vs. Faster Payments comparison

The comparison between CHAPS and the Faster Payments service is best seen by looking at the main features. Each of these payment systems has different types of features that customers can access to enable them to make the right choice.

Feature	CHAPS	Faster Payments
Speed	Same-day payment times (funds go through in hours)	Instant payments (seconds or minutes)
Limits	No limit on the amount that can be sent	Maximum of  £1 million can be sent in each transfer
Availability	Only on weekdays, and during business hours	Can be used 24/7/365
Cost	Each transfer is normally between £25 and £30	Free or low-cost transactions
Irrevocable transfers?	Yes, real time payments and finality	Yes, although it may not always be instant.

When to use CHAPS and Faster Payments?

When you need to send funds between banks and other financial institutions like building societies, are CHAPS transfers or Faster Payments best? To understand the choice, we can examine the situations in which each of these payment systems is most effective. 

CHAPS

This can be used by businesses for high-value transfers to a bank account or UK property transactions. The money is guaranteed to arrive by the end of the day, so it suits those situations where businesses or individuals need certainty over their transfers.

Faster Payments

This system is ideal for instant payments on everyday business transactions between companies and consumers or customers. It means that it works well for companies wanting to make payroll payments in the UK or send supplier payments. 

Real-time examples

Let’s say that a property purchase needs to go through today, so the seller needs to receive the funds before the close of business to complete the transaction. But the money doesn’t need to arrive immediately in the account. In this case, the CHAPs payment system gives a safe and reliable approach that suits the property industry perfectly.

Another example could be an emergency payment to a business supplier when the banks are closed. In this case, the Faster Payments service is the right choice for making speedy payments without having to wait for the bank’s opening times. Rather than setting up standing order payments or waiting for CHAPS payment operations, this is a real-time payments system that gets the money to customers immediately.  

In terms of regular operations, we could look at the need to make payroll payments to staff. It is a convenient approach that sees the payments land in staff bank accounts almost immediately and without any hassle for the companies that pày in this way.

Companies may decide that CHAPS is the best payments system when paying for high-value goods or service costs. This is a safe, secure method of sending large payments that are time-sensitive. If they need to send instant payments or when banks in the network are closed, Faster Payments would be a better option.  

How Genome can help

As a Genome client, you have access to a couple of transfer options when you need to send funds. For instance, all our clients can make regular SEPA Credit Transfers, as well as send/receive payments within seconds with SEPA Instant Transfers. We offer different types of payment options, so that our customers always have access to the most suitable ways of sending funds using our intuitive banking app.

Genome also uses CHAPS and Faster Payments as a part of our international transfers feature, which is available for business wallet clients.

This is how it works: we use an Intelligent Routing System to ensure international payments are sent through the most cost-effective and efficient route. While SWIFT is the primary system, the routing technology automatically selects alternatives like Faster Payments, CHAPS, or TARGET2 when better suited for a specific transfer. This system applies to all outgoing international payments, while incoming transfers can be sent via SWIFT, Faster Payments, BACS, CHAPS, or TARGET2, depending on the payer’s choice.

Choose your Faster Payments or CHAPS with the right provider

As we’ve seen, the Faster Payments scheme is ideal for instant payments and can be carried out at any time, but it has an upper limit in place. CHAPS payments go through on the same day, and there is no upper limit on this service. These differences mean that you can choose the type of payment services that are right for your business and industry in each case. 

To use either, you need to find payment service providers you trust. No matter what service your business needs, you can find a fast, most cost-effective option in Genome. We provide comprehensive support for both international payments and SEPA Instant/Credit transfers.