CHAPS

CHAPS is the UK’s Real Time Gross Settlement scheme. 

What it is and what it does: 

• CHAPS is the scheme for high-value wholesale and retail payments; 
• CHAPS Payments are settled individually intraday in central
bank funds; 
• It is chosen for critical payments; 
• Participants can choose urgent payments (in real time) or
non-urgent same day payments; 
• Swift routed payments. 

Operational details: 

The CHAPS system is open for settlement from 06:00 until 18:00, Monday – Friday. The Direct Participant has the right to call an extension to 20:00 should there be an operational need. Settlement is continuous during opening hours. Participants can choose to make urgent payments, which settle immediately, or non-urgent payments, which benefit from optimised liquidity management. Each bank’s settlement account is credited or debited at the Bank of England in real time as each payment is presented. The Bank of England sends confirmation of settlement to each participating bank. Processing between Direct Participants is governed by the scheme. 

CHAPS Use Cases 

Time-critical irrevocable high value payments are sent via CHAPS: 

• Wholesale financial payments 
• Corporate treasury 
• Commercial business and financial transactions of all values 
• High-value public sector transfers 
• Retail purchases including house and car purchases 
• Education fees 
• International sterling payments, using SWIFT message standards and infrastructure 
• Other critical payments 

There are two access models to join CHAPS: 

Direct Participant 

• A Bank of England settlement account is mandatory 
• Must become a shareholder of the scheme company 
• Must comply with legal, operational and technical rules/requirements 
• Increased control and visibility of CHAPS traffic 
• More effective liquidity management 
• Minimal Credit risk between Direct Participants 
• Potential revenue generation opportunities 
• No minimum payment limit 
• Enhanced CHAPS operational timetable 
• Right to call an extension 
• Participation in CHAPS governance 
• Control over timing of transmission and settlement 

Indirect Participant 

• Commercial relationship between sponsor bank (who is a Direct Participant of the scheme) and the Indirect Participant 
• Responsible for meeting the criteria set out by the sponsoring bank in support of the overall scheme 
• Settlement account at the Bank of England not required 

Cost considerations for joining scheme 

Higher 

• SWIFT 
• Infrastructure, operational and security requirements 

Medium 

• External fees 
• Participation charge (usage based) 

Lower 

• One off Vocalink charge 
• Bank of England account management fee 
• Shareholder charge 

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