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 8, 2024; first full calendar year under new standard in 2025)
Max Transaction
No limit
Clearing Mechanism
Continuous bilateral and multilateral netting algorithm — the core innovation of CHIPS. Netting reduces ~$2.0T gross to ~$96B net settlement, a 26:1 liquidity efficiency ratio.
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
Yearly Growth
9% value growth, 12% volume growth (2025 vs 2024)
As of Dec 31, 2025 · The Clearing House
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.
Jun 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.
84dNov 14, 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.
312dJun 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.
678dJun 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.
Timeline
Dec 31, 2025
CHIPS subsystem record updated
CHIPS subsystem record changed from Continuous bilateral and multilateral netting algorithm — the core innovation of CHIPS. Netting reduces ~$1.8T gross to ~$90B net settlement.
SourceDec 31, 2025
CHIPS subsystem record recorded
CHIPS subsystem record recorded as 9% value growth, 12% volume growth (2025 vs 2024) (as of 2025-12-31). First structured value captured by ClearingPost on 2026-08-07.
SourceIntelligence (12)
NewsJun 12, 2026
17 US Banks Commit to Clearing House Tokenized Deposit Settlement Network
TCH's blockchain-based deposit tokenization platform, backed by JPMorgan, Citigroup, Bank of America, and 14 other financial institutions, will connect on-chain settlements to existing CHIPS and RTP rails. The target launch is the first half of 2027.
NewsJun 8, 2026
The Clearing House to Operate Tokenized Deposit Network With Bridge to CHIPS and RTP
A consortium of seventeen US banks will build a shared tokenized deposit platform operated by The Clearing House, connecting on-chain settlement of commercial bank money to the existing CHIPS and RTP payment infrastructure.
AnalysisJun 5, 2026
CHIPS Crosses $2 Trillion in Daily Value as Huntington Joins Network
Huntington National Bank became CHIPS's 43rd direct participant on May 19, 2026, following its merger with Cadence Bank. The network's continuous matching engine now settles payments for 43 clearing members, reducing required prefunding to roughly $96 billion against more than $2 trillion in gross throughput.
NewsMay 23, 2026
Huntington National Bank Joins CHIPS as 43rd Direct Participant
CHIPS processed an average $2.014 trillion in daily value across 632,419 transactions in 2025. Daily net positions settle through Fedwire in central bank money.
AnalysisMay 15, 2026
Fedwire and CHIPS Both Start Q1 2026 Above 2025 Baselines
First-quarter 2026 data from the Federal Reserve and The Clearing House shows both Fedwire and CHIPS running above their 2025 daily averages, with CHIPS posting stronger relative gains in settled value.
AnalysisApr 27, 2026
Fedwire and CHIPS Settle Combined $6.9 Trillion Daily in Q1 2026
Q1 2026 data from the Federal Reserve and The Clearing House show both US large-value payment systems running above their 2025 full-year averages. CHIPS volume growth has outpaced Fedwire for the second consecutive year.
NewsApr 9, 2026
CHIPS Averages $2 Trillion Daily Value in 2025 With 12 Percent Volume Growth
The system's multilateral netting algorithm generated $15.4 million in daily liquidity savings during the year. That was up from $14.3 million in 2024. Annualized savings totaled approximately $5.6 billion across 42 direct participants.
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.
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.
NewsMar 23, 2026
SWIFT Structured Address Mandate Looms as Industry Surveys Reveal a Third of Payment Providers Unprepared
Industry surveys reveal that only a third of payment service providers are fully prepared for the November 2026 SWIFT CBPR+ structured postal address mandate, while nearly half of banks report that their customer address data remains in legacy unstructured formats. The readiness gap raises operational risk for cross-border payment processing across every major RTGS system that connects to the SWIFT network.
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