EXCLUSIVE: Bank of England’s CHAPS Payments System Goes Down – The Payments Industry Reacts

A global payments technical issue caused The Bank of England‘s CHAPS payment system yesterday (Thursday 18th July) to fail leaving a large proportion of time-sensitive and high-value payments delayed.

According to The Bank of England in February 2021, the average daily value of CHAPS payments was £341 billion, and the bank-to-bank payments system is used by individuals who are buying expensive items like a car or to paying a deposit on a house. Meanwhile, financial institutions and the largest businesses in the UK use CHAPS to settle foreign exchange transactions and money market settlements. Many more financial institutions also access the CHAPS system indirectly and make payments via direct participants which is knowns as agency or correspondent banking.

The CHAPS system was established in 1981 by the Bankers Clearing House in London, but throughout its 43 year history has been operated by several organisations until the Bank of England took over in 2017.

At the time of the CHAPS outage, The Bank of England said: ‘A global payments issue is affecting the Bank’s CHAPS service and delaying some high value and time-sensitive payments, including some house purchases.

We are mindful of the impact this is likely to have and are working closely with a third party supplier, industry and other authorities to resolve the issue as promptly as possible. If you are concerned about a CHAPS payment you plan to make or receive today, please contact your bank, or other payment service provider. Retail payment systems are unaffected so people and businesses can continue to use cash points, card payments and bank transfers as normal.

Ryta Zasiekina, Founder of payments company CONCRYT on the issue: “The outage of the UK’s large-value payment system, Chaps, highlights the critical need for payment firms to enhance their security measures and operational resilience. These disruptions, which affect high-value transactions such as house purchases, significantly undermine industry trust and stability. With the Bank of England reporting a ‘global payments issue’ delaying these essential payments, the urgency for robust and reliable payment systems has never been more apparent. While less likely to be felt as quickly by the consumer as the recent outages with contactless payment systems that affected the high street, the implications of these high-value transactions are much more acutely felt by the average person.

Chaps processes over £300 billion in transactions daily, and any interruption can have profound economic implications. Despite assurances from the Bank that retail payment systems remain unaffected, the recurrence of such outages—three major incidents in the past decade—raises serious concerns about the infrastructure’s reliability. The central bank’s ongoing efforts, including working closely with third-party suppliers and other authorities, are crucial, yet the persistent issues call for a more rigorous approach to contingency planning and crisis management”.

Alex Reddish, Managing Director, Tribe Payments: “The news that another major payment system – the UK’s CHAPS – is out of action emphasises why so many regulators worldwide are pushing ahead with operational resilience frameworks. After the failure of several corporate and retail payment platform outages this year, it’s even more worrying that national payment systems around the world are going down with increasing frequency. Whether it’s because of cyberattacks or the failures of legacy tech to handle increasing complexity remains to be seen.

Incidents like these illustrate how much we depend on these systems in our daily lives, and how much we rely on the smooth flow of payments no matter which system they pass through.

The UK’s forthcoming New Payments Architecture (NPA) will go some way to modernising and improving stability for interbank and retail payments, but it’s been beset by a series of delays and we’re still waiting for an implementation date. The core principle of the NPA is to streamline interbank payments into a single settlement system, replacing the numerous systems currently in operation. Until the NPA is ready to go live, today’s news goes to show that the payment industry, regulators, and system operators must move faster to ensure that the current systems handling payments are resilient enough not to be taken down by more incidents.”

Commenting on the issue with CHAPS payments delaying housing transactions, Joe Pepper, UK CEO of PEXA said: Home buyers having a payment ‘glitch’ hold their transactions up is yet another proof point that the technology and infrastructure supporting the market is no longer fit for purpose. It is creaking at the seams. Buying a home is a stressful and laborious enough experience as it is for consumers without it being compounded by payments falling through or getting held up.

Digitisation cannot come soon enough. With new regulation putting consumer outcomes front and centre, it is imperative that we see the adoption of new, reliable technology that improves the experience for home movers and remortgagers, speeding up transaction processes from days to minutes.

Working with the Bank of England, we have built an entirely new payment system for the housing market – an alternative to CHAPS – and we are working to embed this with the industry. We believe having a scalable system that can reliably handle peaks in demand will future proof the housing market, preventing this type of issue from recurring.

At 4:30pm on the 18th July, The Bank of England issued another statement: “We are pleased to confirm that the third party supplier has restored service following their earlier issues, and CHAPS payments are settling as normal. We expect that all payments received by the Bank today will be settled by the end of the day.

“If you are concerned about a CHAPS payment you plan to make or receive today, please contact your bank, or other payment service provider.’