CHAPS, BACS, SWIFT and Faster Payments explained

Struggling to understand your bank statement, or need to make a particular kind of payment? The UK banking industry uses a number of terms for transfers, and not all of them are familiar to personal banking customers.

In this guide, we’ll clear up any confusion and bust through the jargon with a simple guide to CHAPS, BACS, SWIFT and Faster Payments. We’ll explain what each is, and the differences between them.

We’ll also quickly show you a money-saving alternative to bank payments, using the Wise account from the money services provider Wise. It’s especially useful for international transfers, letting you send money worldwide for low fees and great exchange rates.

Please see the Terms of Use for your region or visit Wise fees & pricing for the most up-to-date information on pricing and fees.

For now though, let’s get back to bank transfer terminology.

What are the different types of bank transfers?

In the UK, there are four main types of bank transfers. These are CHAPS, BACS, SWIFT and Faster Payments. Each is used for a different purpose and has its own costs, speed and requirements. We’ll give you the lowdown on each below.

CHAPS payment

CHAPS (Clearing House Automated Payment System) payments are usually used for retail, wholesale and high value payments within the UK.

One of the main benefits of this payment type is that it's quick, arriving either instantly or the same day.¹ So if you want to make a large, same-day payment, CHAPS is what you’d go for.

They’re ideal perfect for large and critical transfers which have to be received right away, such as paying a deposit on a house.

There’s no minimum limit for a CHAPS payment, although they tend not to be used for smaller transfers as there’s a fee attached. We’ll look at this and other transfer fees later in this guide.

BACS payment

BACS (Bankers Automated Clearing Services) payments are just ordinary transfers between UK bank accounts. They’re used by personal and business customers everyday.

This type of fee-free payment comes in two types - Direct Debits, and Direct Credits. The upper limit for how much you can send via BACS varies between banks and accounts.

BACS payments usually take up to three business days to clear.¹ So if you need your payment to arrive more quickly, you’ll need to use either CHAPS or Faster Payments.

To send a BACS payment, you’ll usually just need your recipient’s bank account details including sort code.

Faster Payments

Faster Payments are near-instant transfers¹ made between UK bank accounts. They’re a relatively new type of transfer in the UK (compared to other bank transfer types), having been introduced in 2008.

It’s one of the most common types of bank transfer for small, everyday payments. You can send money with Faster Payments 24/7 and it’ll arrive in the recipient’s account almost instantly. Best of all, you don’t usually have to pay anything extra to make use of the service, and it happens automatically.

SWIFT payment

SWIFT (Society for Worldwide Interbank Financial Telecommunication) payments are specially designed for international transfers. If you want to send money between your UK bank account and an account in another country, you’ll usually use SWIFT.

SWIFT is actually a network of banks, each with their own SWIFT code to identify them.

It’s not the quickest way to make a transfer though, with the average payment taking 1-4 business days.¹ The transfer time often depends on where you’re sending to and which banks are involved. Your payment could be routed through several banks on its journey, which takes longer and can cost more.

Speaking of cost, SWIFT payments usually have a fee charged by your bank. And if other banks are involved along the way, you (or your recipient) could pay extra in what is known as correspondent or intermediary bank charges.

The differences between CHAPS, BACS, SWIFT, and Faster Payments

To help you work out which transfer type is right for you, here’s an at-a-glance view of the key differences between each:

How much does a CHAPS, BACS, SWIFT or Faster Payment cost?

Now we come to the important part - how much does each type of transfer cost? It can vary between UK banks and providers, but here’s a look at what fees to expect:

How long do different payment methods take?

Along with the fees, you’ll also want to know how long different bank transfer types take to arrive. This will be essential if you need a payment to arrive in a hurry.

Here’s a guide to transfer times for each payment method:¹

Wise – A low-cost alternative to bank transfers

Need to send money overseas? A bank can be a slow and expensive option, as we’ve seen here. But luckily, there is a faster, easier and money-saving alternative available from the money services provider Wise.

Open a Wise account online and you can send money worldwide in 40+ currencies in just a few clicks. Fees are low and transparent, and you’ll always know exactly what you’re paying upfront.

Best of all, you’ll always get mid-market exchange rates, which are usually a lot better than banks can offer. This means that more of your money reaches your recipient.

Sign up with Wise today 💰

Please see the Terms of Use for your region or visit Wise fees & pricing for the most up-to-date information on pricing and fees.

Sources used for this article:

Sources checked on 06-Dec-2023.