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What are CHAPS, BACS, SWIFT, SEPA and Faster payments?

There are several different banking payment schemes used for different types of payments, which each come with their own advantages and disadvantages. Here are some of the special features of each payment type.

CHAPS payment

The Clearing House Automated Payment System – CHAPS – payments are used for high-value payments. Although there’s no minimum payment limit, CHAPS payments are not generally used for low-value transfers because they’re typically quite expensive to process. CHAPS payments are usually worth more than £10,000, and can be settled immediately, making them perfect for large and critical transfers which have to be received right away.

BACS payment

BACS stands for Banker’s Automated Clearing Services – and the BACS payment system has been in existence for 50 years. BACS payments are used for in-country bank transfers, including direct debits. Most people receive their salary from their employer via a BACS payment of some type, for example. Typically, it takes a couple of days to receive a BACS payment.

Faster Payment

Faster Payments are available for in-country bank-to-bank transfers, and are typically one of the quicker ways to move money between bank accounts. In most cases a Faster Payments transfer is processed in a matter of seconds. You could use this route to pay a small amount of money that you want to send quickly, for example. The maximum transaction limit set by the Faster Payments operator is £250,000.

SWIFT payment

The Society for Worldwide Interbank Financial Telecommunication – or SWIFT – is a network that allows banks to communicate financial information securely.  SWIFT payments are offered by most European banks and building societies, for international money transfers, and involve a series of banks which work together to make sure your money ends up in the right place. SWIFT payments can be moved between –one to three correspondents, or intermediary banks, before reaching your recipient. SWIFT payments are the most common choice for making international payments, but they’re not necessarily the cheapest or fastest option out there.

SEPA payment

SEPA stands for the Single Euro Payments Area and is the new format for cross-border Euro bank transfers. SEPA aims to make cross-border Euro transfers within this area equivalent to a domestic transfer within your own country. SEPA is made up of the Eurozone, countries within the EU and a few other countries which also support Euro bank transfers.

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