A recent Bank of England working paper explores how a policy adjustment in the UK’s instant payments network has triggered a noticeable migration away from the country’s main high-value settlement system. Released on 24 April 2026 and written by economists James Duffy and James Sanders, the study uses the February 2022 decision by Faster Payments to lift its single-transaction ceiling from £250,000 to £1 million as a natural experiment.
Bank of England pointed out that the change suddenly gave mid-sized sterling transfers a viable alternative to CHAPS, the institution’s real-time gross settlement (RTGS) system traditionally reserved for urgent or large payments.
CHAPS processes time-critical obligations—such as house purchases, interbank settlements and corporate treasury flows—in central bank money on a transaction-by-transaction basis.
Faster Payments, by contrast, delivers funds to recipients almost instantly for end-users while settling in net batches three times a day.
Until 2022 the two systems barely overlapped in value range, but the limit increase opened the door for substitution.
To measure the shift, the authors assembled monthly CHAPS volume data from January 2017 to September 2024, focusing on the newly contested £250,000–£1 million band.
They constructed counterfactual scenarios—what CHAPS activity would have looked like without the limit rise—by drawing on closely related series: higher-value CHAPS payments (£1–2.5 million), UK residential and commercial property transactions, and the House Price Index.
Three complementary statistical techniques were applied: a straightforward intervention model, multiple linear regression synthetic controls, and a Bayesian structural time-series approach. All methods converged on the same conclusion.
Between February 2022 and September 2024, the number of CHAPS payments in the affected range ran 10.7 to 13.7 per cent below the level predicted by the no-change benchmark.
That equates to roughly 1.2–1.6 million fewer transactions over the period. The effect strengthened gradually rather than appearing as a sudden cliff-edge drop, suggesting users and banks adjusted their behavior as awareness and operational processes caught up.
Substitution proved especially pronounced for customer credit transfers—roughly double the rate observed for financial institution flows—and was more evident at the lower end of the new limit band.
The research findings matter for several reasons. First, they supply some of the earliest rigorous evidence that instant-payment schemes can meaningfully compete with RTGS for mid-tier wholesale and retail-style business.
Cost differences appear influential: Faster Payments charges banks a fraction of a penny per transaction versus roughly 43 pence in CHAPS. Instant fund availability for recipients also trumps the occasional queuing delays in CHAPS.
Liquidity costs of pre-funding instant schemes proved negligible for these payment sizes, which represent only about 2 per cent of CHAPS’ total value.
For payment-system operators and central banks, the results highlight opportunities and risks. On one hand, greater choice can spur innovation and resilience; Faster Payments could serve as a back-up channel during outages.
On the other, sustained migration may erode the revenue base of RTGS systems and alter liquidity-management incentives across the financial sector.
The Bank of England’s own future roadmap for CHAPS will need to weigh these dynamics carefully.
As instant payment adoption accelerates worldwide, this UK episode offers a timely case study.
Policymakers elsewhere may soon face similar substitution pressures, making tariff design, messaging standards and contingency planning critical.
While the paper cautions that UK-specific factors—such as a mature instant-payments infrastructure and housing-market linkages—limit direct international comparisons, it nevertheless marks an important step toward understanding how digital payment rails reshape the foundational infrastructure of modern economies.
