Is CHAPS classified as a DNS or RTGS system?

CHAPS, which stands for Clearing House Automated Payment System, is classified as a Real-Time Gross Settlement (RTGS) system. This classification is significant because RTGS systems facilitate the continuous processing and settlement of payments in real-time. That means transactions are settled individually and immediately as they occur, which reduces the risk of default and enhances liquidity management.

In the context of payments, CHAPS allows large-value transaction processing in a secure manner, ensuring that both the payer and the payee have immediate confirmation of the completed transaction. This is critical for businesses and financial institutions that rely on the swift and secure transfer of substantial sums of money.

On the other hand, a DNS (Deferred Net Settlement) system processes transactions in batches at designated intervals rather than in real-time, which is not the case with CHAPS. Therefore, classifying CHAPS strictly as an RTGS system aligns perfectly with its operational characteristics and the role it plays in the financial system.