Which statement about the Clearing House Automated Payment System (CHAPS) is true?

Which statement about the Clearing House Automated Payment System (CHAPS) is true?

• A. It can be expensive due to administrative requirements.
• B. It is designed for small-value transfers.
• C. It is always free.
• D. It can be used for high-value goods because it is more reliable.

Answer: (D)

CHAPS is a UK payment system that provides real-time gross settlement, meaning each transfer is settled on the same day and is final and irrevocable. This setup is specifically designed for high-value payments where speed and certainty matter. Because funds are settled in central bank money and final once processed, CHAPS offers a high level of reliability for large sums—exactly the kind of requirement you have when paying for high-value goods. That’s why the statement describing its use for high-value purchases because of its reliability is the best fit. It’s not aimed at small-value transfers, and banks may charge fees for CHAPS, so it isn’t always free.

CHAPS is a UK payment system that provides real-time gross settlement, meaning each transfer is settled on the same day and is final and irrevocable. This setup is specifically designed for high-value payments where speed and certainty matter. Because funds are settled in central bank money and final once processed, CHAPS offers a high level of reliability for large sums—exactly the kind of requirement you have when paying for high-value goods. That’s why the statement describing its use for high-value purchases because of its reliability is the best fit. It’s not aimed at small-value transfers, and banks may charge fees for CHAPS, so it isn’t always free.