difference between z

Difference between BACS and CHAPS

Difference between BACS and CHAPS

BACS and CHAPS are both payment systems used in the UK. They differ in a few ways, so let’s take a look at what each one is used for and how they work.
BACS is mainly used to make large payments between businesses, while CHAPS is more commonly used for personal transactions. BACS payments can take up to three days to clear, while CHAPS payments are immediate. This makes CHAPS ideal for things like paying rent or bills. Ultimately, it comes down to what the recipient prefers – BACS for larger payments or CHAPS for smaller, immediate payments.

What is BACS?

BACS Bankers Automated Clearing Services is a UK-based payments company that processes Direct Debit and BACS Payment instructions. BACS provides the technical infrastructure and services for the clearing and settlement of interbank payments in the UK. BACS was formed in 1968 to replace the then existing cheque clearing system which was manual, slow and prone to error. BACS processes around 4 billion payments every year, with a value of over £6 trillion. BACS is owned by a consortium of banks and building societies, and is regulated by the Financial Conduct Authority.

What is CHAPS?

CHAPS is the Clearing House Automated Payment System, which is a real-time gross settlement system for high-value payments in the United Kingdom. CHAPS is used for payments of all types, including interbank transfers, sterling transactions between banks and other CHAPS participants, and CHAPS payments made by customers of banks that are CHAPS members. CHAPS transfers are irrevocable and typically settle on the same day that they are initiated, which makes CHAPS an important tool for managing risk in the UK financial system. CHAPS is overseen by the Bank of England and the Payments Systems Regulator, and is managed by a consortium of major banks known as the CHAPS Clearing Company.

Difference between BACS and CHAPS

BACS (Bankers’ Automated Clearing Services) and CHAPS (Clearing House Automated Payment System) are two of the most common methods used for making payments in the UK. BACS is a three-day service that is typically used for salary payments, while CHAPS is a same-day service that is often used for large or time-sensitive payments. While BACS is a cheaper option, it is not suitable for urgent payments. CHAPS, on the other hand, comes with a higher cost but offers the advantage of speed. As a result, it is important to choose the right payment method based on your specific needs.


In order to understand the difference between BACS and CHAPS payments, it’s important to first understand what each acronym stands for. BACS is an abbreviation for Bankers Automated Clearing Services, while CHAPS stands for Clearing House Automated Payments System. Both of these systems are used to process UK bank transfers, but they work in slightly different ways. BACS payments are automated and usually take two working days to clear, whereas CHAPS payments are cleared immediately and can be used to transfer money between banks instantly. If you need to make a payment quickly, then a CHAPS payment is your best option.

Share this post

Share on facebook
Share on twitter
Share on linkedin
Share on email