DEFINITION of Clearing House Automated Payments System (CHAPS)

Clearing House Automated Payments System (CHAPS) is a British company that facilitates the trading of European currency. CHAPS provides same-day fund transfers for the sterling and the euro. CHAPS transfers are used when money needs to be moved from one account to another. CHAPS transfers are fairly costly, with an average fee of 30 pounds per transfer. CHAPS eliminates float time that occurs with check writing and prohibits the sender from rescinding the payment.

BREAKING DOWN Clearing House Automated Payments System (CHAPS)

CHAPS was first established in London in 1984. It is currently used by 19 settlement banks (including the Bank of England) and over 400 submember institutions. In 2004, CHAPS averaged 130,000 transactions per day, moving 300 billion pounds sterling. New, lower cost transfers have recently become available from the CHAPS system.

Main uses of CHAPS include the settlement of money market and foreign exchange transactions among the world’s largest companies and financial institutions, high value and time-sensitive payments among corporations, the completion of housing and other property transactions, and the purchase of high-value items such as a car or home.

Direct Participants in CHAPS

CHAPS's direct participants consist of traditional high-street banks and several international and custody banks. At present, the following CHAPS direct participants are:

  • Bank of America N.A. (London) 
  • Bank of China Limited (London)
  • Bank of England
  • Bank of New York Mellon (London)
  • Bank of Scotland plc (part of Lloyds Banking Group)
  • Barclays Bank plc
  • BNP Paribas SA (Londo)
  • Citibank N.A. (London branch)
  • ClearBank Limited
  • CLS Bank International (an Edge Act Bank based in New York)
  • Clydesdale Bank plc
  • Danske Bank (a trading name of Northern Bank Limited, part of the Danske Bank Group)
  • Deutsche Bank AG (London)
  • Elavon Financial Services DAC (UK branch)
  • HSBC Bank plc
  • J.P. Morgan Chase Bank N.A. (London)
  • Lloyds Bank plc (part of Lloyds Banking Group)
  • National Westminster Bank plc (part of Royal Bank of Scotland Group)
  • Northern Trust Company (London)
  • Royal Bank of Scotland plc (part of Royal Bank of Scotland Group)
  • Santander UK plc (part of Banco Santander Group)
  • Societe Generale (Paris Head Office)
  • Standard Chartered Bank plc
  • State Street Bank and Trust Company (London)
  • Svenska Handelsbanken AB (London)
  • The Co-operative Bank plc
  • UBS AG (London)

Numerous other institutions access the CHAPS system indirectly via the direct participants above in a process known as agency or correspondent banking.