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Clearing House Interbank Payments System

From Alfawiki
Adapted from the English Wikipedia article Clearing House Interbank Payments System, available under CC BY-SA 4.0Updated 8 August 2025
The Clearing House Interbank Payments System (CHIPS)
Company typePrivate
IndustryFinancial services, Payment systems
Headquarters
New York City
,
United States
Area served
United States, International (cross-border USD transactions)
ProductsHigh-value wire transfer clearing and settlement
OwnerMember financial institutions (banks and financial firms)
Websitewww.theclearinghouse.org/payments/CHIPS

The Clearing House Interbank Payments System (CHIPS) operates as a private U.S. clearinghouse dedicated to handling high-value wire transfers.

By late 2024, CHIPS processes approximately 500,000 transactions each day, with a combined value of about US$1.8 trillion. Together with the Federal Reserve Banks' Fedwire Funds Service, CHIPS constitutes the leading U.S. infrastructure for large-scale domestic and cross-border USD transactions, capturing nearly 96% of the market share. The rules governing CHIPS transfers are established under Article 4A of the Uniform Commercial Code.

In contrast to Fedwire, which functions within a regulatory framework, CHIPS is owned and managed by its member financial institutions. Banks frequently select CHIPS for payments that are less time-critical due to its cost efficiency and lower liquidity requirements. This distinction arises because Fedwire operates on a real-time gross settlement basis, whereas CHIPS employs multilateral netting techniques to mitigate settlement risk and enhance liquidity management.

Differences from Fedwire

There are three primary distinctions between CHIPS and Fedwire: CHIPS is privately held by The Clearing House Payments Company LLC; participation is limited to 47 major member banks (compared to over 9,000 institutions connected to Fedwire as of 2009); and it functions as a netting system rather than processing payments in real time.

As a netting system, CHIPS aggregates multiple outstanding payment obligations into fewer netted transactions. For instance, if Bank of America owes American Express $1.2 million while American Express owes Bank of America $800,000, CHIPS would net these amounts into a single $400,000 payment from Bank of America to American Express. By contrast, Fedwire would execute these as two distinct transfers.

Members

Ownership of CHIPS lies with financial institutions. The Federal Financial Institutions Examination Council (FFIEC) states that any banking entity with a regulated presence in the U.S. can become an owner and participate in the system. Participants encompass commercial banks, Edge Act corporations, and investment firms. Prior to 1998, membership required maintaining a branch or agency in New York City. Institutions not directly participating must route international payments through a CHIPS member acting as their correspondent.

List of members

As of , there are 41 member institutions along with their countries of ownership:

See also

References


External links

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