In November 2018, the TARGET Instant Payment Settlement (TIPS) platform 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 following the same procedures and for the same cost in all euro-area countries, with no limits on amounts. The cost, for banks that use the service, is very low, as there are no charges for opening or maintaining an account, and the fee for individual instant payment transactions is set at 0.20 cents (€0.002). Participating banks can, in turn, provide their retail customers with the instant payment service at a low cost. The Eurosystem has developed and manages TIPS on a full cost recovery, not-for-profit basis.
Objectives of TIPS
In line with what has been achieved in the large-value payments sector (with T2) and the securities sector (with TARGET2-Securities), the Eurosystem created TIPS with a twofold objective: to promote market infrastructure efficiency by providing an innovative solution for instant retail payment settlements, and to facilitate the pan-European integration of payment systems. With TIPS, the Eurosystem has consolidated its status as infrastructure manager and developer, setting up a system that provides services not just to financial institutions (as T2 and TARGET2-Securities do), but also to individuals and businesses across Europe.
While operating as part of a consolidated group with Deutsche Bundesbank, Banque de France and Banco de España (4CBs), Banca d'Italia was chosen by the Eurosystem to act as sole service provider in developing and operating the platform. Furthermore, in its capacity as national central bank, Banca d'Italia is also responsible for providing support and liaising with Italy's financial community, as is already the case for T2 and for 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 service participants can withdraw liquidity from their T2 accounts and deposit it in their dedicated TIPS account for settling instant payments. The system can also settle payments in non-euro currencies, so that, for instance, the Swedish central bank has been able to use TIPS to settle instant payments in Swedish krona since May 2022. Adjustments to the system are being considered that would make it possible to settle instant payments between two different currencies, with a sender making a payment from an account denominated in one currency to a recipient whose account is in another.
Participation and reachability in TIPS
TIPS includes the following types of actors:
- participants, which have one or more accounts in TIPS
- reachable parties, which do not have a TIPS account of their own, but have an agreement with a participant to use their account
- instructing parties, which 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, all payment service providers (PSPs) that have adhered to the SEPA Instant Credit Transfer (SCT-Inst) scheme and are reachable in the RTGS component of T2 are also required to become reachable in TIPS, either as a participant (by opening a central bank money liquidity account) or as a reachable party (i.e. through the account of another PSP that is a TIPS participant).
[1] The scheme is described in the SEPA Instant Credit Transfer (SCT Inst) Rulebook.
Contacts
Markets and Payment Systems Directorate General
Payment Systems Directorate
Wholesale Payment Systems Division
Via Pastrengo 14 - 00185 Rome
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
