TIPS is a Eurosystem service for the settlement of instant payments which went live on 30 November 2018.

TIPS stands for TARGET Instant Payment Settlement:

T stands for TARGET

In legal terms, TIPS is a component of TARGET, even if it is being run as a separate platform. It is the first of three projects which has been realised to enhance the Eurosystem’s market infrastructure (the other two projects being T2/T2S consolidation and the Eurosystem collateral management system ECMS). The ECB Governing Council’s decision in June 2017 to put the TIPS project into practice paved the way for this innovative service to be added to the TARGET family.

TARGET

IP stands for instant payments

In 2014 the Euro Retail Payments Board (ERPB) defined instant payments as “electronic retail payment solutions available 24/7/365 and resulting in the immediate or close-to-immediate interbank clearing of the transaction and crediting of the payee’s account with confirmation to the payer (within seconds of payment initiation). This is irrespective of the underlying payment instrument used (credit transfer, direct debit or payment card) and of the underlying arrangements for clearing (whether bilateral interbank clearing or clearing via infrastructures) and settlement (e.g. with guarantees or in real time) that make this possible.”

The European Payments Council (EPC) fleshed this definition out in greater detail in a European payment scheme – the SEPA Instant Credit Transfer (SCT Inst) scheme – which entered into force in November 2017. TIPS enables participating credit institutions to settle instant payments throughout Europe in compliance with the SCT Inst scheme rules.

S stands for settlement

Transactions in TIPS are settled directly in secure central bank money. Because TIPS requires all payments to be pre-funded and the payment amount is blocked on the TIPS account of the payment service provider sending the payment before the payment message is sent to the receiving participant, the settlement of interbank payments is risk-free for participating credit institutions. Holdings on TIPS accounts are counted towards the minimum reserve requirements. On average, it takes less than 100 milliseconds to settle a transaction in TIPS.