London-based payments fintech Modulr has secured one of the most significant structural advantages available to a non-bank financial firm in the United Kingdom, gaining direct participation in the Clearing House Automated Payment System (CHAPS) and earning the right to settle high-value transactions straight through the Bank of England. The achievement marks a pivotal moment not only for Modulr itself, but for the broader trajectory of non-bank payment service providers competing in the upper echelons of British financial infrastructure.
What CHAPS Membership Actually Means
CHAPS is the United Kingdom's premier high-value payment scheme, the backbone of same-day sterling settlement for transactions ranging from corporate treasury movements to large-scale property purchases. Direct participation in CHAPS is not a routine regulatory tick-box. Historically, access to this system has been the exclusive preserve of major clearing banks, with smaller institutions and non-bank firms forced to route their high-value payments through larger correspondent banks — paying fees, absorbing delays, and surrendering a degree of operational control in the process. For a fintech operating in the payments-as-a-service space, this dependency on intermediaries represented both a cost burden and a competitive ceiling.
By becoming a direct participant, Modulr eliminates that intermediary layer entirely. The company now holds its own settlement account at the Bank of England, meaning its transactions clear with the same finality and speed available to the traditional banking giants that have long dominated this channel. In practical terms, this translates into faster settlement certainty for Modulr's clients, reduced counterparty risk, and a structural cost efficiency that the company can pass on, or retain as margin.
A Non-Bank Challenging Banking Architecture
The significance of Modulr's status as a non-bank payment service provider with direct CHAPS access cannot be overstated. The regulatory and operational framework that governs high-value settlement was built for banks, by banks, over decades. Non-bank entrants gaining equivalent access represents a deliberate policy shift — one supported by regulators and the Bank of England itself — to foster competition and resilience in the United Kingdom's payments ecosystem.
Modulr, which provides payments infrastructure to businesses across sectors including lending, insurance, and accountancy software, has positioned itself as the engine behind other companies' payment capabilities rather than a consumer-facing brand. Its clients rely on Modulr's infrastructure to move money at scale, which makes the CHAPS milestone directly commercially consequential. Every high-value transaction that previously had to travel through a correspondent bank can now flow through Modulr's own infrastructure, with settlement finality guaranteed at the central bank level. That is an extraordinary operational upgrade.
The Broader Policy Context
The United Kingdom's payments landscape has been undergoing sustained structural reform. Regulatory bodies and the Bank of England have increasingly signalled their intent to widen direct access to core payment systems, viewing fintech participation not as a concession to disruption but as a mechanism for building a more competitive and resilient national payments architecture. The Payment Systems Regulator has pushed for greater access to Faster Payments and other rails, and CHAPS access for non-banks fits squarely within that trajectory.
Modulr's achievement arrives at a moment when the debate over non-bank access to settlement infrastructure is intensifying across Europe and globally. In the European Union, discussions around the role of payment institutions within TARGET2 settlement systems continue. In the United States, the question of Federal Reserve master accounts for non-bank fintechs remains politically contested. Against that backdrop, the United Kingdom's willingness to grant a fintech direct Bank of England settlement rights positions London as a jurisdiction that is genuinely committed to translating its open-finance rhetoric into operational reality.
What This Means for the Market
For Modulr's competitors and clients alike, the implications are immediate and material. Businesses that rely on payment infrastructure providers will now scrutinise whether their chosen partner can offer the settlement certainty and speed that CHAPS direct participation delivers. Fintech firms that still route through correspondent banks will face mounting pressure to accelerate their own access applications or risk losing enterprise clients to providers with superior infrastructure credentials.
For Modulr, the milestone is both a validation of its regulatory standing and a commercial differentiator of the first order. Achieving direct participant status in CHAPS places the company in rare company — and in a category that, until recently, was effectively closed to any firm without a full banking licence. The fact that a non-bank payment service provider has now crossed that threshold sends a clear signal to the market: the infrastructure advantage that traditional banks have long taken for granted is no longer exclusive. Modulr's CHAPS membership is, in the most precise sense of the phrase, a key milestone — and one with consequences that will ripple well beyond the company's own balance sheet.
Written by the editorial team — independent journalism powered by Codego Press.
