Bank Transfer Modes: CHAPS, BACS, SWIFT, and Faster Payments

Bank transfer modes in the UK include CHAPS, BACS, SWIFT, and Faster Payments, each designed for different types of transactions. These methods vary in speed, cost, and purpose, offering tailored solutions for routine, high-value, and international transfers.

What You Will Learn From This Blog

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Introduction

Are you puzzled by your bank statement or unsure about how to make a specific payment? The UK banking sector uses several terms for transfers that might not be familiar to everyday banking customers.

This guide aims to clear up any confusion and simplify the jargon surrounding CHAPS, BACS, SWIFT and Faster Payments. We’ll explain each type and highlight their differences.

We’ll also briefly introduce a cost-effective alternative to bank payments using the Instant Payment from the financial services provider Finexer. It’s particularly useful for international transfers, allowing you to send money with low fees and competitive Transaction rates.

What are the main types of bank transfers in the UK?

The UK banking system primarily uses four types of bank transfers: CHAPS, BACS, SWIFT and Faster Payments. Each serves a different purpose and has its own costs, speed and requirements. Let’s explore each one in detail.

CHAPS payment

CHAPS (Clearing House Automated Payment System) is typically used for retail, wholesale and high-value transactions within the UK. Its main advantage is speed, with payments arriving either instantly or on the same day.¹ If you need to make a large, same-day payment, CHAPS is your go-to option. It’s ideal for substantial and time-critical transfers that must be received immediately, such as paying a house deposit. While there’s no minimum limit for a CHAPS payment, it’s rarely used for smaller transfers due to associated fees.

BACS payment

BACS (Bankers Automated Clearing Services) payments are standard transfers between UK bank accounts, used daily by individuals and businesses alike. This fee-free payment method comes in two forms – Direct Debits and Direct Credits. The maximum amount you can send via BACS varies depending on your bank and account type. BACS payments typically take up to three working days to clear.¹ For quicker transfers, you’ll need to use either CHAPS or Faster Payments. To make a BACS payment, you usually only need the recipient’s bank account details, including their sort code.

Faster Payments

Faster Payments are near-instantaneous transfers¹ between UK bank accounts. Introduced in 2008, they’re a relatively new addition to the UK banking landscape. This is one of the most common transfer types for small, everyday transactions. Faster Payments can be sent 24/7, and the funds arrive in the recipient’s account almost immediately. The best part? You typically don’t pay extra for this service, and it happens automatically.

SWIFT payment

SWIFT (Society for Worldwide Interbank Financial Telecommunication) payments are designed specifically for international transfers. If you need to send money between your UK bank account and an account in another country, you’ll likely use SWIFT. SWIFT is actually a network of banks, each identified by their unique SWIFT code.

While SWIFT transfers are reliable for international payments, they’re not the swiftest option. The average transaction takes 1-4 business days.¹ Transfer duration often hinges on the destination and banks involved. Your payment might pass through several banks en route, which increases time and potentially cost.

Regarding expenses, SWIFT payments typically incur a fee from your bank. If other banks are involved in the process, you (or your recipient) might face additional charges known as correspondent or intermediary bank fees.

Comparing CHAPS, BACS, SWIFT, and Faster Payments

To help you determine the most suitable transfer type, here’s a quick overview of the key distinctions between each:

Advantages	Limitations
CHAPS	– High-value payment transfers- Same-day transactions
BACS	– Suitable for routine transfers- Generally free of charge
SWIFT	– Secure method for international payments
Faster Payments	– Near-instant transactions- Usually free

What are the costs for CHAPS, BACS, SWIFT, or Faster Payments?

Now for the crucial bit – the cost of each transfer type. While fees may vary among UK banks and providers, here’s an overview of expected charges:

Payment type	Approximate cost
CHAPS	Typically £20-£30²
BACS	Usually free or minimal cost
SWIFT	Bank-set fees ranging from £5³ to £25⁴ + possible intermediary/recipient bank charges + potential exchange rate markup
Faster Payment	Usually free or minimal cost

How long do different payment methods take?

Besides fees, you’ll want to know the processing times for various bank transfer types. This is crucial if you need a payment to arrive promptly.

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

Payment type	Processing time
CHAPS	Instant or up to 1 working day
BACS	Up to 3 working days
SWIFT	1-4 working days
Faster Payments	Almost instantaneous

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