CHAPS (Clearing House Automated Payment System)

CHAPS (Clearing House Automated Payment System) is the United Kingdom's high-value payment system for sterling. The Bank of England owns and runs it, and every payment goes through on its own and cannot be reversed, moving instantly between accounts held at the Bank via the Bank's real-time gross settlement (RTGS) service. Because settlement happens in central bank money, a CHAPS payment is final as soon as it settles.

CHAPS carries a small share of UK payments by number but the large majority by value. It is used for wholesale financial market transactions, interbank and corporate treasury payments, and time-critical retail payments, most visibly the completion of residential property purchases.

CHAPS began operating in 1984, run by a company owned by its member banks, as an electronic replacement for same-day paper settlement in London. Payments were initially settled on a deferred net basis at the end of the day; in 1996 the system moved to real-time gross settlement across the Bank of England's books, removing the credit risk that banks had carried during the day under deferred net settlement. In November 2017 the Bank of England took over direct operation of CHAPS from CHAPS Clearing Company, making it both operator of the system and its settlement provider.

The Bank has since modernized the infrastructure. CHAPS adopted the ISO 20022 messaging standard in 2023, and a renewed RTGS core settlement platform went live in 2024, designed to improve resilience, widen access and support interoperability with other systems.

A customer instructs its bank to make a CHAPS payment. If the bank is a direct participant, it sends a payment message over the SWIFT network to the Bank of England. The RTGS system checks that the sending bank has enough funds in its reserve account or settlement account, debits it, credits the receiving bank's account and releases the message to the receiving bank, which credits its customer. The interbank leg is settled the moment the accounts are updated, giving immediate payment finality.

Banks that are not direct participants send CHAPS payments as indirect participants through a direct participant acting as a correspondent. To manage liquidity, banks can borrow intraday from the Bank of England against eligible collateral, and the system includes liquidity-saving features that match offsetting payments.

• No upper limit — CHAPS has no maximum payment size, so it handles very large wholesale transfers.
• Same-day value — payments sent within operating hours on a business day reach the recipient bank the same day.
• House purchases — conveyancers use CHAPS for completion funds because the money must arrive with certainty on the agreed day.
• Market settlement — the cash legs of securities and foreign exchange transactions, including sterling pay-ins to CLS, settle through the Bank's RTGS infrastructure.

Banks set their own customer fees for CHAPS, which are typically higher than for retail transfers.

For lower-value transfers, most UK payments use Faster Payments, which gives near-instant credit to the recipient but settles between banks on a deferred net basis, with a per-transaction limit set by the scheme and individual banks. In the United States, the closest equivalent to CHAPS is Fedwire, also an RTGS system run by the central bank, whereas CHIPS is a private system that nets payments. The euro area's equivalent is the Eurosystem's T2 service. Unlike these domestic RTGS systems, card schemes and ACH-type systems batch payments and settle later.

As operator, the Bank of England sets CHAPS rules and admits participants; as a systemically important payment system, CHAPS is also subject to the Bank's financial market infrastructure supervision and to the competition and access remit of the Payment Systems Regulator. For the Bank's role more widely, see the Bank of England regulator profile.

• Bank of England