Bacs, CHAPS & Faster Payments: What’s the difference?
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The document outlines three main UK payment methods: BACS, CHAPS, and Faster Payments. BACS payments take three days to process and are inexpensive, CHAPS offers same-day processing for a higher fee, and Faster Payments are quicker, allowing for payments 24/7 at a modest cost. It also details the security measures in place for each payment method and their common use cases.
Bacs, CHAPS & Faster Payments: What’s the difference?
- 1. Bacs, CHAPS & Faster Payments: What’s the difference?
- 2. Three popular UK Payment methods… Most forms of UK business payments are now covered by Bacs, CHAPS or Faster Payments. Bacs payments - take 3 banking days to process, but cost just a few pence to make. CHAPS payments - faster than Bacs, but costs more (usually between £25- £30). Faster Payments - quicker than Bacs, cheaper than CHAPS. This presentation will give you an overview of each payment method including what they are used for, how to use them, and the security provided by each one.
- 3. Bacs (Bankers’ Automated Clearing Services) was launched in 1968. Bacs is the central payment system used to process several different types of electronic payments. The vast majority of Bacs payments are Direct Debits or Direct Credits. Bacs payments take a minimum of 3 banking days to process, and cost just a few pence to make. What can I use Bacs payments for? Bacs payments are used for Direct Debits and regular payments from businesses such as wages and pensions. If a payment is time-critical, Bacs payments may not be the best option. Faster Payments and CHAPS are quicker.
- 4. How do I make a Bacs payment? Direct Debits are automatically directed through Bacs - so the customer doesn’t need to do anything. If a customer wants to transfer money from an account that doesn’t allow Faster Payments (using phone or internet banking), the payment will automatically be processed via Bacs. • Security Multi-layered security is built into Bacs payment processing. Only approved businesses are allowed to collect Direct Debits. If anything goes wrong customers can rely on The Direct Debit Guarantee to get an immediate refund.
- 5. CHAPS (which stands for Clearing House Automated Payment System, but is nowadays only referred to by its acronym) was launched in 1984. CHAPS is a same-day automated payment system for processing payments made within the UK (sterling only). CHAPS payments are faster than Bacs, reaching the recipient’s bank account the same working day. CHAPS payments cost more than Bacs - usually between £25- £30 per transaction). What can I use CHAPS payments for? The most common use for CHAPS is buying property. Solicitors use CHAPS payments to transfer the purchase price of a house between the bank accounts of those involved. CHAPS can also be used by individuals buying or selling a high-value items such as cars, when a secure same-day guaranteed payment is required.
- 6. How do I make a CHAPS Payment? To make a CHAPS payment, customers will normally need to visit a branch of your bank, with appropriate identification. Before making a CHAPS payment, it is good practice to check the bank’s ‘Faster Payments’ limit, as this will be a cheaper option. • Security CHAPS users get a refund from their bank if they are an innocent victim of fraud. If a user gives incorrect information and the payment goes astray, their bank must make ‘reasonable efforts’ to trace the transaction but has no liability for getting the funds back.
- 7. Faster Payments was launched in 2008. Faster Payments cost only slightly more than a Bacs payment, and are much faster – taking hours rather than days. The Faster Payments Service allows customers to make electronic payments seven days a week, 24 hours a day. The Faster Payments Service satisfies the requirement that all internet, phone and standing order payments must be processed by the end of the next business day. What can I use Faster Payments for? Faster Payments are used extensively by UK businesses and the general public alike: Businesses use Faster Payments for payroll processing, supplier payments, expenses and last minute business-to- business payments. The general public use Faster Payments to pay bills and standing orders, and to make online transfers.
- 8. How do I make a Faster Payment? Faster Payments are typically made by phone or internet banking. The amount of money that can be transferred using Faster Payments is limited to between £10,000 and £100,000, depending on the bank or building society. Sort codes able to receive Bacs payments can also receive Faster Payments. The Payments Council publishes a handy Sort Code Checker that provides this information. • Security Card readers and secure devices are sometimes used in addition to normal internet banking login details. Some banks require the customer to enter additional details when making online payments. As with CHAPS payments, entering details incorrectly can lead to money ending up in a different account and being difficult to retrieve.
- 9. AccessPay’s Payment and Cash Management Solutions give businesses like yours access to all the features and benefits of CHAPS, Bacs and Faster Payments. Any Questions? AccessPay CEC Winchester - Crawford Place, 259-269 Old Marylebone Rd, London NW1 5RA Tel: +44 (0) 203 282 7152 Email: info@accesspay.com Website: www.accesspay.com Blog: blog.accesspay.com Connect with us: