What is RTGS? A Complete Guide to CHATS & FPS Transfers in Hong Kong

What is RTGS (Real-Time Gross Settlement)?

Why does the banking system need it?

RTGS (Real-Time Gross Settlement) is one of the core infrastructural components of the modern banking system. To understand its importance, we can break down the term literally:

• Real-Time: Transfer instructions are processed immediately upon receipt without any waiting period (unlike traditional batch processing).
  
• Gross: Each transaction is settled individually. It is not bundled with other transactions or subjected to "netting" (the process of totaling all receivables and subtracting payables).
  
• Settlement: The settlement is final and irrevocable. Once funds are credited to the receiving bank's account, the transaction is considered complete.
  

The banking system needs RTGS for three primary reasons:

• Safety: Traditional netting systems carry "settlement risk." If a bank fails before the end of the day and cannot pay its debts, it could trigger a domino effect, leading to a collapse of the entire financial system. RTGS uses transaction-by-transaction real-time settlement; once funds arrive, the settlement is final, completely eliminating this credit risk.
  
• Immediacy: For high-value or time-sensitive transactions (such as financial market trades or real estate), RTGS ensures that funds move from one party to another almost instantly.
  
• Handling Large Transactions: RTGS systems are specifically designed to handle large-value payments between banks, large corporations, and financial institutions, typically without a low maximum limit.
  

RTGS vs. CHATS: 2 of Hong Kong’s Real-Time Payment Systems

So, what is the relationship between RTGS and "CHATS," which we often hear about?

Simply put, RTGS is an international systemic concept and standard, while CHATS is the specific name of the RTGS system implemented in Hong Kong.

CHATS (Clearing House Automated Transfer System) is the local RTGS system operated by Hong Kong Interbank Clearing Limited (HKICL) and regulated by the Hong Kong Monetary Authority (HKMA).

In Hong Kong, when you need to make a large local transfer (such as paying a property down payment or a large corporate invoice), the system you use is CHATS. It supports real-time settlement for four currencies: HKD, USD, RMB, and EUR.

Comparison of Hong Kong’s Three Major Transfer Systems: CHATS vs. FPS vs. SWIFT

After understanding CHATS (RTGS), let’s compare the three most common transfer methods in Hong Kong:

CHATS (Clearing House Automated Transfer System)

• Usage:
  

• Large local HKD transfers (usually exceeding FPS limits, e.g., millions or tens of millions).
  
• Large-scale corporate transactions and financial market settlements.
  
• Local interbank transfers of foreign currencies (USD, RMB, EUR).
  

• Features:
  

• Safe and reliable, providing final and irrevocable settlement protection.
  
• Same-day credit, but subject to "cut-off times" (usually around 5:00 PM to 5:30 PM on working days, varying by bank).
  
• Usually requires the recipient's bank name, bank code, and full account number.
  

FPS (Faster Payment System)

• Usage:
  

• Small-value local daily payments (supports HKD and RMB).
  
• Splitting bills with friends, paying utility bills, online shopping, or paying merchants.
  

• Features:
  

• Operates 24/7, including weekends and public holidays.
  
• True instant arrival (usually completed within seconds).
  
• Transfers can be made via mobile number, email address, or FPS ID—no bank account number required.
  
• Usually free for personal banking users.
  
• Has daily transfer limits (e.g., HK$10,000 to HK$1,000,000, depending on the bank and personal settings).
  

SWIFT (Telegraphic Transfer/Wire Transfer)

• Usage:
  

• Global cross-border transfers (e.g., sending money to the US, UK, Australia, etc.).
  
• Supports almost any major currency in almost any country.
  

• Features:
  

• A standardized system used globally.
  
• Takes longer, usually 1–5 working days, depending on intermediary banks and the destination.
  
• Higher fees due to multiple charges from the sending bank, correspondent banks, and the receiving bank.
  

Local Transfers: Should I choose CHATS or FPS?

For local transfers in Hong Kong, the choice is mainly between CHATS and FPS.

When MUST you use CHATS?

Despite the convenience of FPS, you must use CHATS (i.e., the bank's "Local Transfer" or "Transfer to Other Bank" function, rather than "FPS") in the following scenarios:

• Scenario 1: Large Transfer Amounts
  

• When your transfer amount exceeds your bank’s daily FPS limit. For example, if you need to pay a HK$3,000,000 property deposit but your FPS limit is only HK$1,000,000, you must use CHATS.
  

• Scenario 2: Local Interbank Foreign Currency Transfers
  

• This is a common misconception. FPS only supports HKD and RMB. If you want to transfer USD from Bank A to a USD account in Bank B (for example, to earn higher interest on a fixed deposit), you must use the CHATS system.
  

When should you use FPS?

• Scenario 1: Daily Small Payments
  

• For almost all daily payments—splitting dinner bills, online shopping, paying rent or tuition—you should prioritize FPS as long as the amount is within your limit.
  

• Scenario 2: Need for 24/7 Instant Transfer
  

• If you need to transfer money urgently during weekends, public holidays, or after bank cut-off times, FPS is your only choice, as CHATS only operates on banking business days.
  

How to do a Local CHATS Transfer (Online Banking Steps)

Steps to use CHATS (interfaces vary by bank, but the process is similar):

• Log in to Online Banking: Access your personal or business account.
  
• Select Transfer Type: Look for "Transfer" or "Payment." Do not select "FPS." Choose "Transfer to other local bank" or a similar option.
  
• Enter Recipient Details: Accurately fill in the recipient's bank name, bank code (e.g., 004), full account number, and account name.
  
• Select Currency and Amount: Choose the currency (HKD, USD, EUR, CNY) and enter the amount.
  
• Select Processing Method: The system may let you choose between "CHATS" (immediate processing) or "Electronic Clearing (ECG)" (takes 1-2 days, lower or no fee). For instant arrival, ensure you select CHATS.
  
• Confirm and Submit: Double-check all details, enter your security code (e.g., OTP), and confirm.
  
• Note the Cut-off Time: Ensure you complete the transaction before the bank's CHATS cut-off time; otherwise, the funds will be processed on the next working day.
  

International Transfers: SWIFT Explained

When funds need to cross borders, the SWIFT system takes the stage.

How does the SWIFT system work?

SWIFT (Society for Worldwide Interbank Financial Telecommunication) does not move money directly; it is a messaging system.

SWIFT provides a secure, standardized communication network for global banks to send payment instructions (e.g., "Please transfer amount X from Customer A to Customer B"). The actual transfer of funds is completed through a network of "Correspondent Accounts" between banks. If Bank A and Bank B do not have a direct relationship, the remittance may pass through one or more intermediary (correspondent) banks, which is why SWIFT transfers take time and can be expensive.

Telegraphic Transfer (TT) Fee Structure

The total cost of a SWIFT transfer usually consists of three parts:

• Outgoing Bank Fee (Charged by the local bank): The "remittance fee" charged by your bank in Hong Kong.
  
• Correspondent Bank Charges: The most easily overlooked hidden cost. If your bank and the receiving bank lack a direct settlement channel, a fee (e.g., USD 20–50) may be deducted by each intermediary bank the money passes through. This is usually deducted from the principal, meaning the recipient receives less than what you sent.
  
• Inward Bank Fee (Charged by the overseas bank): The bank at the destination may also charge a fee for receiving the funds.
  

Required Information for Remittance

To ensure a successful transfer, you must provide:

• Recipient's Full Name and Address: Must match bank records.
  
• Recipient's Bank Account Number: In Europe, this is usually an IBAN. Elsewhere, it is the local account number.
  
• Bank’s SWIFT Code (or BIC Code): The international ID of the bank, consisting of 8 or 11 characters.
  
• Recipient Bank Name and Address.
  
• Purpose of Remittance: E.g., family expenses, investment, tuition.
  

Overview of Major Bank Transfer Fees

Fees are a major consideration. Here is a comparison of major Hong Kong banks based on 2025 data (Note: Fees change and vary by account tier; check with your bank before transacting).

Local CHATS Fee Comparison (Online vs. Branch)

Key Note: For most personal accounts, HKD CHATS transfers via online banking are currently Free. Fees usually apply for branch processing or foreign currency CHATS.

[Table:1]

*Hang Seng 2025 data: Foreign currency CHATS via Mobile App may be eligible for fee waivers.

SWIFT (Remittance) Fee Comparison

These are fees for transfers initiated via online banking (excluding intermediary/receiving bank fees).

[Table:2]

How to Save on Transfer Fees?

• Tip 1: Prioritize Online Banking over Branches
  

• As shown above, fees for branch processing are often several times higher than online banking.
  

• Tip 2: Use FPS for Small Transfers
  

• All local HKD and RMB small-value transfers should be done via FPS, which is completely free.
  

• Tip 3: Choose High-Tier Accounts for Waivers
  

• If you frequently perform SWIFT or local foreign currency transfers, consider upgrading to "Priority Banking" (e.g., HSBC Premier, Citi Gold). While these have minimum balance requirements, they often waive CHATS and SWIFT fees, saving you a significant amount in the long run.
  

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