Running a small business means learning how to manage cash flow, invoices, payroll, and supplier costs. In other words, money in and money out. Usually, we don’t pay much attention to how our money reaches its destination – it’s out of sight, out of mind. But understanding these ‘payment rails’ can help you manage your cash flow more effectively, save money, and avoid costly mistakes, making it well worth your time. The four payment rails you’ll encounter most often in the UK are BACS, CHAPS, Faster Payments, and SWIFT. All move money between bank accounts, yet they vary in speed, cost, and purpose. Here’s a straightforward look at how they differ. What is BACS? BACS stands for Bankers’ Automated Clearing System. It’s the workhorse of everyday business banking, running on a three‑day cycle: day one you submit the payment file, day two the clearing house processes it, and day three the funds land. Because payments are batched, banks keep fees low – some don’t charge at all while others add only pennies, which is great if you run a weekly payroll or pay dozens of suppliers at once. The trade‑off is time: you can’t use BACS for a last‑minute bill because it won’t arrive fast enough. BACS supports two variants: Direct Credit – pushing money out (salaries, supplier runs) Direct Debit – pulling money in (utility bills, subscription collections) Both follow the same three‑day timetable. If you need a window to cancel or amend a payment, that delay can be handy. Just remember the lag when cash is tight or the payment is urgent. What is CHAPS? CHAPS means Clearing House Automated Payment System. It moves money within the UK the same working day, often in under an hour once the bank releases the funds. Many people encounter CHAPS for the first time during a property settlement, when the full purchase price must land in the solicitor’s account before close of business. Unlike Faster Payments, which has a transaction cap, CHAPS has no upper limit on the amount that can be sent. There’s no formal minimum either, yet its flat fee sits around £20-£30 per transfer, so most businesses reserve CHAPS for large, time-critical sums. All the main UK banks participate, and the scheme processes payments one-by-one rather than in batches. Once sent, the funds settle instantly via the Bank of England’s real-time gross settlement system. What is Faster Payments? Launched in 2008, Faster Payments bridges the gap between slow BACS runs and pricey CHAPS transfers. Today it powers most UK online and mobile banking moves, with payments arriving in seconds and available 24/7 – even on Christmas morning. The network has a scheme limit (one million pounds as of 2025), but banks often set lower individual caps – commonly around £250,000 or even lower (£20,000 to £50,000) – for risk control. It's worth checking your bank’s specific limit, particularly if you regularly handle larger amounts. Most everyday business transfers fall comfortably below typical bank limits, making Faster Payments the default choice for routine domestic transactions. Notably, banks rarely charge for Faster Payments. That mix of speed, round‑the‑clock availability and zero cost explains why the scheme processes billions of transactions every year. The only catch is finality: once you hit send, the money is gone. If you mistype an account number you’ll rely on the recipient’s goodwill or your bank’s best efforts to recover it. What is SWIFT? The Society for Worldwide Interbank Financial Telecommunication – SWIFT – isn’t a payment system in the same way as BACS or CHAPS. It’s a global messaging network that tells banks where to route funds. When you send money abroad, your UK bank creates a SWIFT message containing the recipient’s details and currency instructions. That message zips through correspondent banks until the beneficiary’s bank credits the account. For payments within the Eurozone, businesses often use SEPA (Single Euro Payments Area), which offers a cheaper and faster alternative to SWIFT for euro transfers. Outside SEPA, SWIFT remains the dominant system for moving money across borders. A SWIFT transfer typically lands within one to four working days, although recent improvements through SWIFT’s global payments initiative (GPI) mean transfers often arrive much faster. About 90% of all SWIFT payments now reach recipients within one hour, and most within 24 hours. Delays of several days can still occur, however, especially for complex currency routes or when multiple intermediaries are involved. When using SWIFT, you pay your own bank to initiate the transfer and you might face a currency‑conversion markup. While fintech alternatives and local‑currency corridors exist, SWIFT remains the most universal way to pay overseas suppliers in their home currency. Since SWIFT payments are very difficult to reverse, it’s wise to send a small amount first as a test before making a large payment. Comparing the various payment rails Note: The limits shown above are scheme-wide maximums. In practice, banks often impose their own thresholds. For Faster Payments, many banks cap well below the £1m scheme limit – often £250k or less for business, and far lower for personal accounts. For SWIFT transfers, the network itself doesn’t impose limits. Rather, the sending and receiving banks (along with regulatory requirements) determine the maximum amount allowed. Which payment system is best for my business? Here are a few examples to illustrate the right payment method for common scenarios: What about card payments? Card schemes like Visa, Mastercard, and American Express run what’s known as a ‘card rail’. That rail routes card transactions from the merchant’s acquirer to the cardholder’s issuing bank and settles later through the scheme’s clearing cycle. It’s what happens when someone taps a card or types in their card number, not when you push money from one bank account to another. Because card fees are usually a percentage of the sale and the customer chooses the payment method, card rails belong in the “how you receive money” conversation, not the “how you send money” one. If your aim is to pay staff or settle supplier invoices, your software will use BACS, CHAPS, Faster Payments or SWIFT. If you want to accept customer payments via card, you’ll need a merchant account and a payment service provider (like Zeller) that plugs into the various card rails. Learn more about how card payments work. When your bank calls the shots (and when you get a say). In most cases, your bank’s platform silently picks the rail – domestic payments under your Faster Payments limit go over FPS, and international transfers use SWIFT – so you won’t see a menu to choose. You only really get to decide when you’ve arranged extra services or hit thresholds, for example: • If you’ve onboarded for BACS direct credit , you can submit batch payroll or bulk runs on the three‑day cycle rather than relying on instant transfers • If you need same‑day certainty for a high‑value domestic payment , the portal will offer a CHAPS option (with its fee and cut‑off details) • If you want to avoid your bank’s SWIFT fees for cross‑border payments you can use a specialist fintech outside your main banking interface By planning ahead like setting up BACS, confirming CHAPS access and choosing whether to use SWIFT or a fintech, you can influence how your money moves. Knowledge is power! The Future of UK Payments: The New Payments Architecture (NPA) The UK is in the process of building the New Payments Architecture (NPA) – a long-term programme to modernise the country’s payment infrastructure. The aim is to eventually consolidate BACS and Faster Payments into a single, more flexible system. Under the NPA, businesses and consumers should see: • Greater speed and flexibility . Payments processed more quickly, with richer data carried alongside them. • Improved resilience and security . A single, modern platform designed to handle growing transaction volumes. • Room for innovation . Making it easier for banks and fintechs to build new services on top of the core payment rails. While the NPA rollout is still in progress, it now sits under the broader National Payments Vision , led by the Bank of England and an industry-run delivery body. The shift in governance doesn’t change the aim of consolidating and modernising UK payment rails, but it does underline the scale of investment and collaboration behind the programme. Keeping an eye on these developments can help businesses prepare for new opportunities and efficiencies as the system comes online.