What is CHIPS? How big US dollar payments settle between banks
By SendPay Business · · 2 min read
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CHIPS, the Clearing House Interbank Payments System, is a private US system that banks use to send large US dollar payments to each other. It's run by The Clearing House, a company owned by major banks, and handles a big share of cross-border dollar payments.
How CHIPS works
- Member banks send payment orders into CHIPS.
- The system matches and nets payments going in both directions between banks.
- Only the net amounts need funding, so much less money has to move.
- Payments settle with finality during the day, and any remaining balances are settled before close.
CHIPS vs Fedwire
Fedwire is run by the Federal Reserve and settles each payment one by one, in full, in central bank money. CHIPS is private and nets payments together to save liquidity. Big banks use both.
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Why it matters for international payments
Many cross-border payments in US dollars pass through correspondent banks in the US, and CHIPS is one of the main systems those banks use to settle with each other.
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Questions people ask
When does a payment settle?
Work out the value date, skipping weekends and bank holidays.
Value date calculator →What is correspondent banking?
Banks holding accounts with each other to move money abroad.
Correspondent banking →Read next
Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.