Existing systems[edit]
Below is a listing of countries and their RTGS systems:
Egypt - RTGS
South Africa - SAMOS (The South African Multiple Option Settlement) [8]
CHAPS
From Wikipedia, the free encyclopedia
For other uses, see Chaps (disambiguation).
The Clearing House Automated Payment System or CHAPS is a British company established in
London in 1984, which offers same-day sterling fund transfers.
A CHAPS transfer is initiated by the sender to move money to the recipient's account (at another
banking institution) where the funds need to be available (cleared) the same working day. Unlike with
a bank giro credit, no pre-printed slip specifying the recipient's details is required. Unlike cheques, the
funds transfer is performed in real-time removing the issue of float or the potential for payments to be
purposefully stopped by the sender, or returned due to insufficient funds, even after they appear to have
arrived in the destination account.
CHAPS is used by 20 Direct Participants including the Bank of England and over 4500 Indirect
Participants. In its first year of operation, average daily transactions numbered 7,000 with an annual
value of 5 billion pounds sterling. In 2004, twenty years later, average daily transactions numbered
130,000 with an annual value of 300 billion pounds sterling. In 2010 there were 32 million CHAPS
transactions totalling over 61 trillion,[1] down from 73 trillion in 2008.[2]
CHAPS used to offer euro fund transfers as a member of the EU-area settlement system TARGET, but
this service closed on 16 May 2008.[1] The total value of these in 2007 was 57 trillion.[2]
As well as making transfers originated by banks themselves, CHAPS is frequently used by businesses
for high-valuepayments to suppliers, by mortgage lenders issuing advances, and
by solicitors and conveyancers on behalf of individuals buying houses.[3]
Problems can arise from delays, e.g. when an exceptional workload at a bank results in the money
being cleared too late in a working day to complete related transactions, or inadequate instructions,
when a bank is not given sufficient information to know where to credit the money, or in human delay in
operating the machines.[3]
Wire transfer
Wire transfer or credit transfer is a method of electronic funds transfer from one person or institution
(entity) to another. A wire transfer can be made from one bank account to another bank account or
through a transfer of cash at a cash office.
Different wire transfer systems and operators provide a variety of options relative to the immediacy and
finality of settlement and the cost, value, and volume of transactions. Central bank wire transfer
systems, such as the Federal Reserve's FedWire system in the United States are more likely to be real
time gross settlement (RTGS) systems. RTGS systems provide the quickest availability of funds
because they provide immediate "real-time" and final "irrevocable" settlement by posting the gross
(complete) entry against electronic accounts of the wire transfer system operator. Other systems such
as CHIPS provide net settlement on a periodic basis. More immediate settlement systems tend to
process higher monetary value time-critical transactions, have higher transaction costs, and a smaller
volume of payments. A faster settlement process allows less time for currency fluctuations while money
is in transit.
History[edit]
Wire transfers originated in the 19th century, sent over telegraph lines. This process gave them their
name wire as telegraphs were transmitted over wires. [1][citation needed]
Bank wire transfers are often the cheapest method for transferring funds between bank accounts. A
bank wire transfer is effected as follows:
1. The entity wishing to do a transfer approaches a bank and gives the bank the order to
transfer a certain amount of money. IBAN and BIC codes are given as well so the bank
knows where the money needs to be sent.
2. The sending bank transmits a message, via a secure system (such as SWIFT or Fedwire), to
the receiving bank, requesting that it effect payment according to the instructions given.
3. The message also includes settlement instructions. The actual transfer is not instantaneous:
funds may take several hours or even days to move from the sender's account to the
receiver's account.
4. Either the banks involved must hold a reciprocal account with each other, or the payment
must be sent to a bank with such an account, a correspondent bank, for further benefit to
the ultimate recipient.
Banks collect payment for the service from the sender as well as from the recipient. The sending bank
typically collects a fee separate from the funds being transferred, while the receiving bank and
intermediate banks through which the transfer travels deduct fees from the money being transferred so
that the recipient receives less than what the sender sent.
Security[edit]
With bank-to-bank wire transfer, each account holder must have a proven identity. Chargeback is
unlikely, although wires can be recalled. Information contained in wires is transmitted securely through
encrypted communications methods. The price of bank wire transfers varies greatly, depending on the
bank and its location; in some countries, the fee associated with the service can be costly.
Wire transfers done through cash offices are essentially anonymous [citation needed] and are designed for
transfer between persons who trust each other. It is unsafe to send money by wire to an unknown
person to collect at a cash office: the receiver of the money may, after collecting it, simply
disappear[examples needed]. This scam has been used often[clarification needed], especially in the so-called 419
scams which often nominate Western Union for collection.
International transfers involving the United States are subject to monitoring by the Office of Foreign
Assets Control (OFAC), which monitors information provided in the text of the wire and then decides
whether, according to the US Government's federal regulations [5][6] and political positions, money is
being transferred to terrorist groups, or countries or entities undersanction by the United States
government. If a financial institution suspects that funds are being sent from or to one of these entities,
it must block the transfer and freeze the funds.[9]
SWIFT or IBAN wire transfers are not completely free of vulnerabilities. Every intermediate bank that
handles a wire transaction can take a fee directly out of the wire payload (the assets being transferred)
without the account holder's knowledge or consent. In many places, there is no legislation or technical
means to protect customers from this practice. If bank S is the sending bank (or brokerage), and bank
R is the receiving bank (or brokerage), and banks I1, I2 and I3 are intermediary banks, the client may
only have a contract with bank S and/or R, but banks I1, I2 and I3 can (and often do) take money from
the wire without any direct arrangement with the client. Clients are sometimes taken by surprise when
less money arrives at bank R. Contrast this with cheques, where the amount transferred is guaranteed
in full, and fees (if there are any) can be charged only at endpoint banks. [10] Europe[clarification needed] offers
some partial protection from this practice by prohibiting European intermediate banks from taking a fee
out of the amount being transferred, even for transatlantic transfers. However, it's still common practice
for a European brokerage firm to state that they charge no transfer fee, and then contract their bank to
take an unpublished fee from the amount transferred as a means to compensate their bank with their
clients' assets. E.g. CMC Markets implements this policy in partnership with Natwest.
EU privacy law may be breached by some USA operators such as SWIFT, so EU users are sometimes
required by their service provider to make an explicit declaration that seeks to circumvent EU privacy
regulations.
Methods[edit]
These providers can offer a range of currency exchange products like Spot Contracts, Forward
Contracts and Regular payments.[14] However, not all of such providers are regulated by appropriate
government body. For example, in the UK, even though such companies are regulated by Financial
Services Authority, not all of them fall under FSA scrutiny.[15]
International[edit]
Most international transfers are executed through SWIFT, a co-operative society founded in 1974 by
seven international banks, which operate a global network to facilitate the transfer of financial
messages. Using these messages, banks can exchange data for the transfer of funds between financial
institutions. SWIFT's headquarters are in La Hulpe, on the outskirts of Brussels, Belgium. The society
also acts as a United Nationssanctioned international standards body for the creation and
maintenance of financial-messaging standards. See SWIFT Standards.
Each financial institution is assigned an ISO 9362 code, also called a Bank Identifier Code (BIC)
or SWIFT Code. These codes are generally eight characters long.[16] For example: Deutsche Bank is an
international bank with its head office inFrankfurt, Germany, the SWIFT Code for which is DEUTDEFF:
Using an extended code of 11 digits (if the receiving bank has assigned extended codes to branches or
to processing areas) allows the payment to be directed to a specific office. For example:
DEUTDEFF500 would direct the payment to an office of Deutsche Bank in Bad Homburg. SWIFT
deviate slightly from the standard though by using position nine for a Logical Terminal ID, making their
extended codes 12 digits long.[17]
European banks making transfers within the European Union also use the International Bank Account
Number, or IBAN.
In the United States, such EFTS transfers are often called "ACH transfers," because they take place
through theAutomated Clearing House.
One important way ACH transfers differ from wire transfer is that the recipient can initiate it. There are
of course restrictions, but this is the way people often set up automatic bill payment with utility
companies, for example.
References[edit]
1.
2.
3.
4.
5.
6.
7.
Jump
up^http://www.bankofamerica.com/deposits/checksave/index.cfm?
template=lc_faq_wire#question4
8.
9.
10.
Jump up^ "Correspondent Bank Fees".
Openoffshorebankaccountsfornonresidents.com. Retrieved 2010-07-01.
11.
12.
Jump up^ Can Western Union Keep On Delivering?. Business
Week
13.
^ Jump up to:a b "Money Transfer South Africa".
MoneyTransferSouthAfrica.org. Retrieved 2011-01-01.
14.
Jump up^ "Currency Specialists". franceforex.com. Retrieved
2011-01-01.
15.
Jump up^ "Currency Specialists". fxcompared. Retrieved 201211-28.
16.
Jump up^ http://www.swift.com/biconline/index.cfm?
fuseaction=display_aboutbic
17.
18.