Clearing House Interbank Payments Company (CHIPS)

What is Clearing House Interbank Payments Company (CHIPS)?
Clearing House Interbank Payments Company (CHIPS) is a bank's own payment system that clears large value payments in real time.

It is classified as an electronic balance payment system for US dollars. CHIPS comprises the majority of payments made worldwide in dollars and includes currency exchange and foreign trade payments. CHIPS is the world's leading provider of wire transfer payments and has a reputation for accuracy and efficiency. CHIPS customers include financial institutions and companies that are celebrating their 40th anniversary in 2010.

CHIPS is a financially secure organization that does not allow its members to have a zero balance and thus avoid overdraft interest that affects cost efficiency. For companies, CHIPS offers secure payments by bank transfer to companies or private individuals. Banks can help decide whether it is faster for a customer to use CHIPS or Fedwire based on constant updates of electronic payment system activity within the banks. This way, the customer will get the fastest and most efficient money transfer.

CHIPS uses online management tools where the netting process starts at 9:00 p.m. Eastern Time when the Fed opens for prefunding and CHIPS opens for payment processing. Banks send and receive payments from 9 a.m. to 5 p.m. During this time, CHIPS will accept payments and approve them. From 5:00 p.m. to 5:15 p.m., the CHIPS system removes credit limits and publishes and settles unresolved payments. At 5:15 p.m., CHIPS releases all remaining payments and sends payment orders to the banks via Fedwire.

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