If you move money in the UK, you will meet three names repeatedly. Bacs, Faster Payments and CHAPS. They all move funds from one bank account to another in different ways, different speeds, and at different bank charges. Picking the right one can help to save time, save fees, and lower risk. Here is a clear, straight answer to how they compare and when to use each.
The Quick Answer
- Bacs is for routine, non-urgent payments in bulk. Think payroll and supplier runs. It is very low cost but takes three working days end to end.
- Faster Payments is near instant for most banks. It runs 24 hours a day, seven days a week. It suits every day and ad hoc payments, from refunds to urgent one offs.
- CHAPS is same day for high value and time critical transfers on working days. It usually costs more and is used for things like property completions or large settlements.
That is the snapshot. The detail below helps you choose with the correct scheme with confidence.
How Each Scheme Works
Bacs
Bacs handles two main things. Bacs Direct Credit for paying out money, and Direct Debit for collecting money. It is built for predictable flows. You send a file on Day 1, it is processed on Day 2, and the money lands on Day 3. Only working days count. Bank holidays and weekends push the timeline out.
Costs are low per transaction. That makes Bacs ideal for paying thousands of employees or suppliers in one go. It also keeps cash collection efficient when you take money by Direct Debit. You can forecast cash because you know the dates. The trade-off is speed, if you miss a submission day, there is
You need the right setup to submit Bacs. Many businesses use a BACS software provider or a bureau. Others connect directly once their bank sponsors them. Either way, you plan the payment calendar and stick to it.
Faster Payments
Faster Payments does what the name says. It moves money in near real time, often within seconds. It runs every day of the year, around the clock. That includes weekends and bank holidays. Limits vary by bank and by channel, so you must check your own cap, but it covers most day-to-day business needs.
It is great for urgent supplier payments, customer refunds, and cash flow fixes. You can also use it to drip feed funds, top up balances, or pay one off bonuses. Fees for businesses differ by bank and account tier. For many, the cost is modest compared to CHAPS, especially for low to mid value transfers.
CHAPS
CHAPS is the same day, high assurance option. It operates on working days with cut off times. If you send before the cut off, funds reach the other bank that day. If you send after, it settles the next working day. The service is designed for high value or time critical uses such as house purchases, large corporate payouts and treasury moves.
The fee per payment is higher than Bacs or Faster Payments. In return, you get finality and speed within the day. It is best when the amount is large, or the timing matters enough to justify the cost.
Key Differences at a Glance
Speed
- Bacs takes three working days.
- Faster Payments is near instant, 24 hours a day.
- CHAPS is same day on working days if sent before the bank’s cut off.
Cost
- Bacs is low cost per item and built for volume.
- Faster Payments fees are typically 3x that of Bacs, but this can vary by bank and what you can negotiate.
- CHAPS carries a higher fee per payment.
Use cases
- Bacs suits payroll, supplier runs, and regular collections by Direct Debit.
- Faster Payments suits urgent one offs, refunds, and day to day business transfers.
- CHAPS suits property completions, large settlements, and time critical moves.
Timing rules
- Bacs follows a fixed three-day cycle on working days.
- Faster Payments runs all year round with no planned daily downtime.
- CHAPS runs on working days with strict cut off times.
Value ranges
- Bacs handles any routine value well, especially in bulk.
- Faster Payments covers low to mid value transfers for most banks, with limits set by the bank.
- CHAPS is used for high value payments where certainty matters most.
When To Use Bacs, Faster Payments and CHAPS
Choose Bacs when:
- You pay staff on a schedule and want predictable costs.
- You pay many suppliers at once and do not need instant settlement.
- You collect by Direct Debit and want a reliable, low-cost process.
- You plan payment dates in advance and can work to a calendar.
Choose Faster Payments when:
- A supplier needs money today and waiting two days will cause issues.
- You need to refund a customer quickly to protect the relationship.
- You are moving funds between your own accounts outside office hours.
- You want flexibility on weekends and bank holidays.
Choose CHAPS when:
- You are sending a large, time critical payment on a working day.
- You need same day certainty and are happy to pay for it.
- The receiving party insists on CHAPS for policy or risk reasons.
Practical Points Which Often Get Missed
Cut off times matter. CHAPS has cut offs. Bacs has submission windows. Put them in your payment policy and calendar. Share them with your team. This avoids last minute surprises.
Bank limits differ. Faster Payments limits are set by each bank and can vary by channel or user role. Check your own limits and approval steps before you rely on them for a key payment.
Finality and recalls. CHAPS payments are final once sent. Faster Payments are usually treated as final, and recalls are not guaranteed. Bacs has its own processes for returns and indemnity in the case of Direct Debit. Train approvers so they understand the risk before they click approve.
Fraud and controls. Faster settlement reduces the window to catch mistakes. Use dual approval, positive pay, and allow lists where you can. Validate beneficiary details. For new or changed bank details, call back on a trusted number.
Cash flow planning. Bacs helps with cash flow because you know exactly when money leaves or arrives. Use it for predictable outgoings. Use Faster Payments to solve spikes or exceptions. Use CHAPS for the occasional high-stake moment.
Reconciliation. Make sure your finance system tags each scheme. A clear process speeds up month end and cuts write offs. Bacs reports specifically and details the status of bulk payments and collections. This makes it easy regardless of the number of transactions.
How To Choose a Standard Approach for Your Business
- List your common payment types
Payroll. Regular supplier runs. Ad hoc supplier payments. Customer refunds. Intercompany transfers. Property and legal settlements. - Map each type to a scheme
Put payroll and bulk supplier runs on Bacs. Put refunds and urgent one offs on Faster Payments. Reserve CHAPS for rare, high value cases. - Set approval rules
Define who can authorise what, and at what values. Use stronger checks for Faster Payments and CHAPS. - Build a payment calendar
Mark Bacs submission days and pay days for the year. Add CHAPS cut offs. Share the calendar with finance and operations. - Review bank limits and fees
Confirm your Faster Payments limit and any fees. Confirm CHAPS charges. Make sure your policy reflects these numbers. - Automate where it helps
Use software that prepares files, validates data, applies approvals, and submits to the right scheme. This reduces errors and saves time.
Use Case Examples
Monthly payroll for 500 staff
Use Bacs. You plan dates in advance, want low cost, and do not need instant settlement.
Supplier needs funds today to release goods
Use Faster Payments. It is quick, clear, and often low cost for this size of payment.
House completion at 11am
Use CHAPS. It gives same day certainty on a working day and is widely accepted for property deals.
Refund to a customer on a Saturday
Use Faster Payments. It runs every day and keeps your customer happy.
Large intercompany move before a board deadline
Use CHAPS if the value is high and timing is critical. If value is lower and your bank limit allows, a Faster Payment might be fine. Weigh cost against risk.
Final thought
Bacs, Faster Payments, and CHAPS each have a job to do. Pick based on speed, cost, value, and risk. Set a policy, automate the routine, and keep clear checks for the exceptions. Do that, and payments stop being a headache and start supporting the way you work.
SmarterPay helps businesses move money with less effort and fewer mistakes. Contact our friendly team today to find out more.