CHAPS (Clearing House Automated Payment System) is the UK’s same-day, high-value payment system. Operated by the Bank of England, CHAPS provides guaranteed same-day settlement for sterling payments with no upper limit on transaction value. It is the payment system of choice for property transactions, large corporate payments and any situation where certainty of same-day settlement is essential.
How CHAPS works
CHAPS operates on a real-time gross settlement (RTGS) basis. This means each payment is settled individually and immediately in the Bank of England’s RTGS system, rather than being batched and netted like BACS payments.
Processing steps
- The payer instructs their bank to make a CHAPS payment
- The bank validates the instruction and checks available funds
- The payment is submitted to the RTGS system at the Bank of England
- The payer’s bank account at the Bank of England is debited
- The recipient’s bank account at the Bank of England is credited
- The recipient’s bank credits the funds to the recipient’s account
- Settlement is final and irrevocable
Cut-off times
CHAPS payments must be submitted before the daily cut-off time:
| Party | Typical cut-off |
|---|---|
| Bank internal cut-off | 14:00 - 15:00 for same-day processing |
| RTGS system | 18:00 (system closes) |
| Customer instruction deadline | Varies by bank, usually 14:00 - 15:30 |
Payments submitted after the customer cut-off time will be processed on the next working day. CHAPS operates on working days only (Monday to Friday, excluding bank holidays).
When to use CHAPS
CHAPS is the appropriate choice when:
- Same-day settlement is required and the amount exceeds Faster Payments limits
- Finality is essential and the payment must be irrevocable
- High-value transactions where the amount exceeds £1,000,000 (the Faster Payments limit)
- Legal or contractual requirements specify CHAPS as the payment method
Common CHAPS use cases
| Use case | Why CHAPS |
|---|---|
| Property purchases | Solicitors require guaranteed same-day settlement for completion |
| Large corporate payments | Amounts exceeding Faster Payments limits |
| Interbank transfers | Settlement between financial institutions |
| Capital market settlements | Securities and bond transactions |
| Tax payments | Large HMRC payments with strict deadlines |
| Business acquisitions | Purchase price settlements on completion day |
Property transactions
CHAPS is used in virtually all UK property transactions. On completion day, the buyer’s solicitor sends the purchase price to the seller’s solicitor via CHAPS. The same-day guarantee is critical because:
- Exchange of keys depends on confirmed receipt of funds
- Multiple transactions in a chain must all complete on the same day
- Delays of even one day can cause chain collapses and significant costs
CHAPS vs other UK payment methods
| Feature | CHAPS | Faster Payments | BACS |
|---|---|---|---|
| Speed | Same day (by cut-off) | Seconds to 2 hours | 3 working days |
| Availability | Working days only | 24/7/365 | Working days only |
| Transaction limit | No maximum | £1,000,000 | No maximum |
| Cost | £20 - £35 (customer fee) | Usually free | Pennies per item |
| Settlement type | Real-time gross | Near real-time | Deferred net |
| Finality | Irrevocable | Irrevocable | Irrevocable on day 3 |
| Best for | High-value, same-day, certainty | Everyday urgent transfers | Bulk payments, payroll |
For more detail on alternatives, see our guides to Faster Payments and BACS payments.
Costs
CHAPS is the most expensive of the three main UK payment methods:
| Cost element | Typical range |
|---|---|
| Customer fee (personal) | £20 - £30 per payment |
| Customer fee (business) | £25 - £35 per payment |
| Receiving fee | Usually none |
Some business banking packages include a number of CHAPS payments per month. For businesses making frequent high-value payments, negotiating CHAPS fees as part of the banking relationship can reduce costs.
Given the cost, CHAPS should only be used when same-day settlement or the transaction amount requires it. For routine invoice payments within Faster Payments limits, Faster Payments is more cost-effective.
Making a CHAPS payment
Through online banking
Most UK banks allow CHAPS payments through their online banking platforms:
- Log in to business banking
- Select CHAPS or same-day payment
- Enter the recipient’s name, sort code and account number
- Enter the payment amount and reference
- Submit before the bank’s cut-off time
- Complete any required authorisation (dual approval for business accounts)
Through your bank directly
For businesses without online CHAPS access, payments can be made by:
- Calling the bank’s corporate banking team
- Visiting a branch (some banks)
- Sending a signed payment instruction by secure message
Information needed
To make a CHAPS payment, you need:
- Recipient’s full name (individual or company)
- Sort code and account number
- Payment amount in sterling
- Payment reference for the recipient to identify the payment
- For international CHAPS payments: IBAN and BIC/SWIFT code
CHAPS and business payment terms
When payment terms require same-day payment or specify CHAPS as the payment method, businesses should:
- Plan the payment in advance to allow time for internal approvals
- Ensure sufficient funds are available before the cut-off time
- Factor the CHAPS fee into the total cost of the transaction
- Obtain confirmation of receipt from the payee for audit trail purposes
Accounting treatment
CHAPS payments are recorded in the same way as any bank transfer:
Payment made
Debit: Trade payables / Asset purchase / Other
Credit: Bank
Payment received
Debit: Bank
Credit: Trade receivables / Revenue / Other
CHAPS fees
Bank charges for CHAPS payments are typically recorded as:
Debit: Bank charges (expense)
Credit: Bank
Because CHAPS settles on the same day, there is no timing difference between the payment instruction and the bank statement entry, which simplifies accounting and reconciliation.
Security and controls
Given the high values typically involved in CHAPS payments, businesses should implement strong controls:
- Dual authorisation requiring two signatories for CHAPS instructions
- Verification of payee details through an independent channel before first payment to a new recipient
- Segregation of duties between those who set up payments and those who approve them
- Reconciliation of CHAPS payments against the bank statement on the same day
- Audit trail documenting the business reason for each CHAPS payment
Fraud prevention
CHAPS payments are irrevocable once settled. This means that if a payment is made to a fraudulent account, recovery is extremely difficult. Common fraud scenarios include:
- Invoice redirection fraud where criminals impersonate a supplier and provide new bank details
- CEO fraud where criminals impersonate a senior executive and request an urgent payment
- Conveyancing fraud where criminals intercept property transaction details
Always verify bank details through a known, independent channel before making a CHAPS payment, particularly for first-time payments or when a supplier notifies you of changed bank details.
Governance and regulation
CHAPS is operated by the Bank of England and is designated as a systemically important payment system in the UK. It is subject to:
- Bank of England oversight as both operator and supervisor
- Payment Services Regulations 2017 governing the rights of payers and payees
- FCA regulation of the banks and payment service providers that participate in CHAPS
- CHAPS Reference Manual setting out the rules for direct participants
Direct participation in CHAPS is limited to major banks and building societies that hold settlement accounts at the Bank of England. Other banks access CHAPS through indirect participation arrangements with direct participants.