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Substitution between RTGS and instant payment schemes: the impact of the 2022 Faster Payments transaction limit increase on CHAPS

Author

Listed:
  • James Duffy

    (Bank of England)

  • James Sanders

    (Bank of England)

Abstract

In February 2022, the UK’s instant payment scheme, Faster Payments, increased its transaction value limit from £250,000 to £1 million. This provided payments in this value range an alternative means to settle. Using a range of methodologies, we study the subsequent impact on the number of payments settled through CHAPS, the UK’s high-value payment scheme that settles payments on a real-time gross basis. We find strong evidence of substitution away from CHAPS to Faster Payments. Specifically, CHAPS volume between £250,000 and £1 million is, on average, between 10.7%–13.7% lower than if Faster Payments had not increased their transaction limit. Furthermore, we find substitution is far greater for customer credit transfers and lower-value payments. These results provide some of the first clear empirical evidence of meaningful substitution from real-time gross settlement schemes to instant payment schemes, raising important implications for payment system operators and the future role of different settlement models.

Suggested Citation

  • James Duffy & James Sanders, 2026. "Substitution between RTGS and instant payment schemes: the impact of the 2022 Faster Payments transaction limit increase on CHAPS," Bank of England Staff Working Paper series 1180, Bank of England.
    • Handle: RePEc:boe:boeewp:023302
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    File URL: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2026/substitution-between-rtgs-and-instant-payment-schemes.pdf
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    References listed on IDEAS

    as
    1. Hartmann, Monika & Gijsel, Lola Hernandez-van & Plooij, Mirjam & Vandeweyer, Quentin, 2019. "Are instant payments becoming the new normal? A comparative study," Occasional Paper Series 229, European Central Bank.
    2. Anneke Kosse & Zhentong Lu & Gabriel Xerri, . "Predicting payment migration in Canada," Journal of Financial Market Infrastructures, Journal of Financial Market Infrastructures.
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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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