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Clearing House Interbank Payments System

Overview#

Clearing House Interbank Payments System (CHIPS) is a United States private Funds Transfer System for large-value Transaction Accounts.

By 2015 it was settling well over US$1.5 trillion a day in around 250,000 interbank payments in cross border and domestic transactions.

Together with the Federal Reserve Wire Network (which is operated by the Federal Reserve Banks), Clearing House Interbank Payments System forms the primary U.S. network for large-value domestic and international Funds Transfer System payments where and has a market share of around 96%.

Clearing House Interbank Payments System transfers are governed by Article 4A of Uniform Commercial Code.

Unlike the Federal Reserve Wire Network which is part of a regulatory body, Clearing House Interbank Payments System is owned by the Financial Institutions that use it. For payments that are less time-sensitive in nature, banks typically prefer to use Clearing House Interbank Payments System instead of Fedwire, as Clearing House Interbank Payments System is less expensive (both by charges and by funds required). Another reason is that Federal Reserve Wire Network is a real-time gross settlement system, while Clearing House Interbank Payments System allows payments to be netted.

More Information#

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