TIPS: Instant payments

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In November 2018, the pan-European instant payment settlement platform, TARGET Instant Payment Settlement (TIPS) was launched, making it possible to transfer funds within seconds of the transaction. The service is available around the clock, 365 days a year, and is able to settle an average of 500 payments per second (some 43 million transactions a day). TIPS is able to settle payments without any limit as to amount, following the same procedures and for the same cost in all euro-area countries. This cost, for banks that use the service, is very low: there are account opening or maintenance charges and the price per instant payment transaction is set at 0.20 cents (€0.002). Participating banks can, in turn, offer their retail customers the instant payment service at low cost. The Eurosystem develops and manages TIPS to operate on a full cost-recovery and not-for-profit basis.

Objectives of TIPS

In line with what it has already achieved in the large-value payments (TARGET2) and securities sectors (TARGET2-Securities), in creating TIPS the Eurosystem has a twofold objective: to promote market infrastructure efficiency by providing an innovative solution for instant retail payment settlement and to facilitate the pan-European integration of payment systems. With TIPS, the Eurosystem has enhanced its status as a manager and developer of infrastructures that provide services to not just financial institutions, as with TARGET2 and TARGET2-Securities, but also to individuals and businesses in Europe.

Banca d'Italia - as part of the consolidated group with Deutsche Bundesbank, Banque de France and Banco de España (4CBs) - was chosen by the Eurosystem to act as the sole provider for developing the service and for operating the platform. In its capacity as national central bank, Banca d'Italia is also responsible for supporting and maintaining relations with Italy's financial community, as is already the case for TARGET2 and TARGET2-Securities.

How does TIPS work?

TIPS is based on SEPA Instant Credit Transfer (SCT Inst), introduced by the European Payments Council on a voluntary basis.[1]

TIPS is linked to the TARGET2 system; any participating bank can therefore withdraw liquidity from their TARGET2 account and deposit it in their dedicated TIPS account for settling instant payments. The system can also settle payments in currencies other than the euro. As of May 2022, the Swedish central bank will use TIPS to settle instant payments in Swedish krona. Adjustments to the system are being considered that would make it possible to settle instant payments between two different currencies (i.e. where the sender's account from which payment is made is denominated in one currency and the recipient's account in another).

Participation in TIPS

TIPS follows the same participation rules as for TARGET2. There are three ways to access the service:

  • Participants: have one or more accounts in TIPS
  • Reachable parties: do not have a TIPS account of their own, but have an agreement with a participant to use its account
  • Instructing parties: are authorized to send settlement instructions to TIPS on behalf of a participant or a reachable party.

In July 2020, the ECB Governing Council launched a number of strategic initiatives to support the full deployment of instant payments across the euro area, in line with the objectives shared with the European Commission.

More specifically, to ensure that instant payments are available across Europe by the end of 2021:

  • all payment service providers (PSP) which have adhered to the SEPA Instant Credit Transfer (SCT-Inst) scheme and are reachable in TARGET2 should also become reachable in TIPS, either as a participant (by opening a central bank money liquidity account) or as reachable party (i.e. through the account of another PSP which is a TIPS participant);

The automated clearing houses (ACH) that offer instant payment services will have to transfer to TIPS their technical accounts currently held in TARGET2.

Contacts

Markets and Payment Systems Directorate General
Payment Systems Directorate
Wholesale Payment Systems Division

Via Pastrengo 14 - 00185 Roma

Tel: +39 06 4792 5700
e-mail: target.services@bancaditalia.it

Markets and Payment Systems Directorate General
Payment Systems Directorate
Eurosystem Market Infrastructures Division
Largo Guido Carli, 1 - 00044 Frascati

Tel: +39 06 4792 6000
e-mail: SSP-SERVICEDESK-IT@bancaditalia.it


TIPS FORMS AND CONTRACTS