One criticism made by owners of personal bank accounts is that they cant make CHAPS payments via Internet banking. The majority of online banks -- that offer CHAPS to their customers -- only offer it to their business account owners. HSBC is a prime example of a bank that currently provides CHAPS payments to owners of business bank accounts, but it does not to personal account owners. What's the big deal about CHAPS? CHAPS stands for Clearing House Automated Payments System and it is a payment system that provides guaranteed same day delivery for payments. In comparison, the Faster Payments and BACS payment systems can arrive same day, but usually take a few days to clear. Faster Payments, as the name suggests, has a much higher likelihood of arriving same day.
Another problem with Faster Payments, is that, while it was designed for large payments -- individual payments of up to £250,000 -- most banks have set a lower payment level. The following high street banks have set the following Faster Payments limits: HSBC £25,000; Barclays £50,000; Lloyds £25,000; Nationwide £10,000; Royal Bank of Scotland £20,000; Santander £25,000; Halifax £25,000; Natwest £20,000. While these payment limits may seem high, they are inconvenient for someone wanting to make a cash purpose for a new home: as they would need to make multiple payments over weeks to fund a £300,000 house purchase via Internet banking. CHAPS, on the other hand, should not have a limit on the amount of funds that can be sent. Therefore, personal account holders will have to book an appointment with their bank, and make the CHAPS payment in person at their branch.
There are some drawbacks to CHAPS: typically it has a cut off point of 3pm - 4pm; payments can only be sent on working days; it can be difficult to cancel CHAPS payments and the bank can not always guarantee funds can be completely recalled; payments usually have a fee attached, from £20-£35. That said, if a bank customer is wanting to send large sums of money -- £50,000 and over -- same day, and for it to delivered in hours (usually can be process in 3 hours) then CHAPS is the only payment system available to most bank customers. Which is obviously why a certain segment of personal bank account holders would love for CHAPS payments to be provided alongside Faster Payments and BACS. It is, however, understandable that the banks are wary of providing it, with an upsurge in attempts to phish and steal personal bank account details online. CHAPS would make it difficult for banks to scrutinise fraudulent large payments: due to the time frame available for fraud checks. Large payments, made via BACS and Faster Payments to new payees, are often subject to checks by the Banks fraud protection team, usually resulting in a phone call to verify ID and the payment.
So, which high street banks currently provide CHAPS payments to their Internet business banking customers: Santander and HSBC.