Clearing House Interbank Payments System
CHIPSACTIVEOperator: The Clearing House (TCH)
Overseer: Board of Governors of the Federal Reserve System, New York State Department of Financial Services
Legal basis: Designated as a systemically important Financial Market Utility (FMU) under Dodd-Frank Title VIII
Launched: Jan 1, 1970
Quick reference: View technical card →
Executive Summary
CHIPS is a large-value USD payment system operated by The Clearing House, processing approximately $1.8 trillion daily. It serves as the primary clearing system for international US dollar payments and cross-border transactions. Unlike Fedwire's pure RTGS model, CHIPS uses a hybrid approach: continuous bilateral and multilateral netting throughout the day, with final settlement via Fedwire. This netting reduces the actual settlement amount to approximately 5% of gross value, dramatically reducing liquidity requirements for participants.
How It Works
Settlement Model
Hybrid: continuous netting with final settlement in central bank money via Fedwire
Message Standard
ISO 20022 (migrated April 2025, aligned with Fedwire migration)
Max Transaction
No limit
Clearing Mechanism
Continuous bilateral and multilateral netting algorithm — the core innovation of CHIPS. Netting reduces ~$1.8T gross to ~$90B net settlement.
Settlement Cycle
Operating hours: 09:00–18:00 ET, Mon-Fri. Continuous bilateral and multilateral netting throughout the day. Final settlement via Fedwire at end of day. Prefunding required at start of day. CHIPS rules last updated April 21, 2025.
Message Flow
The sending participant submits a payment message to CHIPS. CHIPS holds the message in queue and continuously attempts bilateral and multilateral netting against other pending messages. When a netting opportunity is found, offsetting payments are released simultaneously with zero funding requirement. Remaining payments are released against prefunded positions or additional funding. At day's end, residual net positions are settled via Fedwire.
Typical Use Cases
Cross-border USD payments, FX settlement, correspondent banking, international trade finance, syndicated loan payments, eurodollar transactions
Key Data
Participants & Access
Membership Requirements
Limited to commercial banking organisations with a significant volume of USD payments. Must meet capital, operational, and risk management requirements. Currently ~43 direct participants, all major global banks.
Governance & Risk
Governance Model
Owned and operated by The Clearing House. Governed by CHIPS Rules and Administrative Procedures. Subject to Federal Reserve and NYDFS oversight. Participant risk committee oversees credit and operational risk.
Concentration Risk
Very high — CHIPS processes the majority of international USD payments. Participant base is concentrated among large global banks. Designated as systemically important FMU. Disruption would affect global USD liquidity.
Resilience & Business Continuity
TCH operates redundant processing sites. Prefunding and closing position requirements limit settlement risk. End-of-day settlement via Fedwire provides central bank money finality. Regular contingency testing.
Dispute Resolution
CHIPS Rules govern inter-participant disputes. Once a payment is released through netting, it is final and irrevocable.
Pricing
CHIPS pricing is based on transaction volume and messaging fees. Specific fee schedules are shared with participants.
Source: The Clearing House
Connectivity
settles via
Fedwire
CHIPS daily net positions are settled via Fedwire in central bank money
Peer Comparison
CHIPS is unique among major payment systems due to its netting model — neither T2 nor CHAPS use netting (both are pure RTGS). CHIPS processes more cross-border USD transactions than Fedwire. The netting efficiency (~95% reduction) is CHIPS's key advantage, significantly reducing liquidity requirements for participants.
Compare in detail →Regulatory Framework
Apr 1, 2025
CHIPS ISO 20022 migration complete
CHIPS completes migration to ISO 20022 message format, aligning with Fedwire’s March 2025 migration.
Jul 1, 2025
IFR interchange cap review
European Commission review of IFR interchange caps. Possible changes to inter-regional and cross-border interchange rates. May address UK-EEA post-Brexit rate increases.
Nov 1, 2025
SWIFT ISO 20022 mandatory for cross-border
All cross-border SWIFT payments must use ISO 20022 (MX messages). MT messages no longer accepted for cross-border payments. Affects all 11,000+ SWIFT member institutions worldwide.
Apr 1, 2026
RBI mandatory two-factor authentication for all digital payments
RBI guidelines published Sep 25, 2025 requiring all domestic digital payments to implement two-factor authentication. Replaces rigid SMS OTP mandate with flexible risk-based approach. At least one factor must be dynamic and unique per transaction. Cross-border CNP additional factor validation required from Oct 1, 2026.
87dJun 30, 2026
Visa USDC settlement expansion
Visa expanding USDC stablecoin settlement on Solana and Ethereum to more markets. Enables 7-day settlement and near-instant cross-border merchant payouts.
211dNov 1, 2026
SWIFT CBPR+ structured address mandate
SWIFT mandates structured postal addresses in all CBPR+ ISO 20022 messages. Unstructured address fields will no longer be accepted for cross-border payments. Financial institutions must ensure all counterparty address data is structured. Industry reports suggest ~44% of banks are behind schedule for Nov 2026 deadlines.
452dJun 30, 2027
UK post-Brexit cross-border interchange review
UK PSR reviewing Visa/Mastercard cross-border interchange increases post-Brexit. UK→EEA debit rose to 1.15%, credit to 1.50% after Brexit.
818dJun 30, 2028
Fedwire extended operating hours
Fedwire expanding to 22 hours/day, 6 days/week, 365 days/year. Significant change for correspondent banking and cross-border payment windows.
Intelligence (74)
AnalysisApr 3, 2026
Argentina's COELSA Clears 15 Million Daily Transfers as QR Payments Surge 83%
Argentina's leading clearing house handles 70% of interbank immediate transfers across 322 million digital accounts, with QR code payment volumes nearly doubling in 2025 and cross-border PIX transfers now live.
NewsApr 3, 2026
JazzCash Onboards One Millionth Raast QR Merchant as Pakistan Targets 15 Billion Digital Transactions
JazzCash processed more than PKR 15 trillion in transaction value during 2025, equivalent to roughly USD 53 billion or 13 percent of Pakistan's GDP. The platform serves 58 million registered customers across Pakistan.
AnalysisApr 2, 2026
Mexico's CECOBAN Cleared 140 Million Batch Transactions in 2023, Daily Volumes Swing Sharply on Payroll Cycles
CECOBAN, the only clearing house authorized by Banco de México, processed 140 million total operations for 38 participating institutions in 2023 with 4.9% annual growth. Daily TEF transaction volumes range from under 80,000 to over 700,000 depending on corporate payroll timing, reflecting the batch system's concentration around scheduled disbursement dates.
AnalysisApr 1, 2026
Fedwire Joins Global Push for Near-Continuous RTGS Settlement
The Federal Reserve's confirmed expansion of Fedwire to 22 hours per day across six days per week, planned for implementation from 2028, adds the United States to a growing list of jurisdictions extending large-value settlement windows beyond traditional banking hours.
NewsApr 1, 2026
Eurosystem Publishes Comprehensive Payments Strategy, Pontes DLT Settlement Set for Q3 2026
The ECB's new framework covers wholesale, business-to-business, retail, and cross-border payments, confirming a Q3 2026 launch for the Pontes tokenised settlement platform after 64 participants settled EUR 1.6 billion in 2024 exploratory trials.
AnalysisMar 30, 2026
EURO1 December 2025 Volumes Peak at 207,642 Daily as Sub-Participant Base Expands
EBA Clearing's large-value hybrid payment system reached its highest monthly averages of 2025 in December, processing 207,642 transactions per day worth €207 billion. The system enters 2026 with 36 direct participants and 34 directly addressable sub-participants, the latter growing from 28 as non-bank PSP access pathways expanded.
RegulationMar 28, 2026
PSR Targets Card Fee Transparency and APP Fraud Evaluation in Final Independent Work Plan
The UK Payment Systems Regulator's annual programme for its last year of independent operation before merging into the FCA commits to implementing domestic scheme fee transparency remedies, advancing cross-border interchange reform, and publishing an independent evaluation of mandatory APP fraud reimbursement.
NewsMar 28, 2026
Duffie Paper Proposes Fedwire Payment Netting to Lower Fed Balance Sheet Floor
Fed Chair nominee Kevin Warsh has advocated reducing the Fed's $6.6 trillion balance sheet, giving the proposal immediate policy relevance. Reserve balances stand at approximately $3 trillion, the largest Fed liability after currency in circulation.
AnalysisMar 26, 2026
Fedwire's 22x6 Expansion: Near-Continuous USD Settlement Targeted for 2028-2029
The Federal Reserve's decision to extend Fedwire Funds Service to 22 hours per day, six days per week positions the United States to close structural gaps in global USD settlement availability, with direct implications for CHIPS netting cycles and cross-border payment flows across Asian and European time zones.
AnalysisMar 26, 2026
Russia's SBP Processed 13.4 Billion Transactions in 2024 as Instant Payments Capture Two-Thirds of Interbank Transfers
Russia is exploring expansion of SBP-compatible payment infrastructure to countries in the Global South as part of broader efforts to develop alternative cross-border payment corridors. The Moscow Metro began piloting SBP-based fare payments in 2025.
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