The new TIPS instant payment service starts today

Instant payments in central bank money have been launched in Europe today, starting in Italy. TIPS, the new instant payment settlement system in euro inaugurated this morning in Rome, is in fact entirely developed and operated by Banca d'Italia on behalf of the Eurosystem.

The event was held at Banca d’Italia's Donato Menichella Centre and attended by Governor Ignazio Visco, Yves Mersch, member of the ECB's Executive Board and Salvatore Rossi, Senior Deputy Governor. TIPS, which stands for TARGET Instant Payment Settlement, guarantees settlement within seconds and is unique in doing this directly in central bank money ('cash without cash'). In practice, the exchange of a payment using TIPS – by smartphone – is the same as a direct exchange of banknotes and coins.

For this to happen, a system was needed that could settle over 2,000 transactions per second, and that was available round the clock, 365 days a year. This new system, which has been completed in 12 months, will be available to all banks wanting to provide their customers with an instant payment service in euro. It is a multicurrency system, which means that all other currencies can be used in the future.

Given that the cost of the service for the instant payments for day-to-day transactions has to be competitive to replace other instruments, such as payment cards and cash, Banca d'Italia has come up with a technical solution that keeps development and operating costs very low, as requested by the Eurosystem. The transaction fee has been set at 0.2 cents, so 1 euro pays for the settlement of 500 transactions! This was a crucial goal for a service that wants to give Europeans the advantage of an instant service at an affordable price. The availability of TIPS to end-users will now depend on how quickly the customers' commercial banks can be ready to use the new service, whose infrastructure is already up and running.

TIPS is a further addition to the range of services that Banca d'Italia has helped to create on behalf of the Eurosystem in order to foster the integration of Europe's financial market, develop innovative payment and settlement services and improve the quality of the services available to EU citizens.