The Clearing House Interbank Payments System (CHIPS) is a United States private clearing house for large-value wire transfer transactions.[1]
As of late 2024, it settles approximately 500,000 payments totaling US$1.8 trillion per day.[2] Together with the Federal Reserve Banks' Fedwire Funds Service, CHIPS forms the primary U.S. network for large-value domestic and international USD payments where it has a market share of around 96%. CHIPS transfers are governed by Article 4A of Uniform Commercial Code.
Unlike the Fedwire system which is part of a regulatory body, CHIPS is owned by the financial institutions that use it. For payments that are less time-sensitive in nature, banks typically prefer to use CHIPS instead of Fedwire, as CHIPS is less expensive (both by charges and by funds required). One of the reasons is that Fedwire is a real-time gross settlement system, while CHIPS uses a system of multilateral netting that provides management of settlement risk as well as some liquidity benefits to its members.[1]
- ^ a b Benson, Carol Coye; Loftesness, Scott; Jones, Russ (2017). "Core Systems: Wire Transfer". Payments Systems in the U.S.: A Guide for the Payments Professional (3rd ed.). Glenbrook Press. pp. 15, 16, 45, 123–128. ISBN 9780982789742. Retrieved 2024-12-19.
- ^ "[https://www.theclearinghouse.org/payment-systems/chips / CHIPS home page