What is a Settlement Service Provider (SSP)?

Payment schemes require a settlement service provider (SSP) to provide final settlement of the various payment flows between the direct participants of a payment scheme. For CHAPS, Faster Payments, Bacs and the Image Clearing System, the Bank [of England] is the SSP, providing settlement via a transfer of funds between settlement accounts held by participants in the Bank’s Real Time Gross Settlement (RTGS) system. The Bank offers settlement services in order to promote both monetary and financial stability, as settlement at a central bank mitigates credit and disruption risk for the participants as well as end-users of the payment schemes. 

CHAPS settles each transaction individually, in gross and in real-time across settlement accounts. In the Deferred Net Settlement (DNS) payment schemes (Bacs, FPS, and the Image Clearing System), end-users make payments during a ‘clearing cycle’ and payment settlement occurs at the end of this cycle. The payment scheme calculates the amount each participant owes/is owed as a result of transactions made during each cycle. This is sent to the Bank, which then simultaneously debits or credits each settlement account this amount. 

Note: The Bank also provides net settlement services to the LINK ATM Scheme and Visa Europe. While LINK is covered in An Introduction to the UK Interbank Payment Schemes, neither it nor Visa are further covered in this guide for non-bank PSPs. The required supporting regulatory and legal arrangements are not currently in place to support settlement in these systems. 

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