TARGET Instant Payment Settlement (TIPS)
TARGET Instant Payments (TIPS) is a new market infrastructure service for transferring funds in real time and around the clock, every day of the year. It is developed as an extension to TARGET2 and enables citizens and firms to perform money transfers between each other within mere seconds. Payments in TIPS are settled in central bank money.
The Eurosystem has introduced TIPS as a pan-European solution to help achieve reachability across the whole of Europe. To that aim TIPS is based on the SEPA Instant Credit Transfer (SCT Inst) – a scheme for pan-European instant payments.
TIPS is live since 30 November 2018.
How does TIPS work?
TIPS offers final and irrevocable instant payments settlement in euro on a 24/7/365 basis. Participating payment service providers can open dedicated cash accounts (TIPS DCAs) in the books of their respective central bank. The NBB will assist Belgian TIPS participants in opening and maintaining their TIPS DCA(s). During TARGET2 opening hours participants can transfer liquidity from a RTGS account held in the Payment Module (PM) of the Single Shared Platform of TARGET2 to ensure there is enough liquidity on their DCA for the continuous settlement of instant payments.
As settlement in TIPS takes place in central bank money, participation in TIPS depends on being eligible to access central bank money. For this reason, in order to open an account in TIPS in euro, an institution needs to fulfil the same eligibility criteria as for participation in TARGET2-BE.
Settlement of an instant payment transaction
- A participant sends an SCT Inst payment transaction message to TIPS.
- TIPS validates and reserves the amount to be transferred.
- TIPS forwards the payment transaction for acceptance to the receiving participant.
- The receiving participant sends a positive reply to TIPS.
- TIPS performs settlement.
- TIPS confirms settlement to the sending participant.
- TIPS confirms settlement to the receiving participant.
TIPS is built on a modern and advanced technical solution that has been developed specifically for the purpose of settling instant payments. The new technical solution is designed to:
- secure an end-to-end processing time of 10 seconds or less
- support the expected large volumes of transactions and meet scalability requirements
- secure availability around the clock without maintenance windows
- enable a deployment process with no interruption in the service.
- there is no upper limit on the amount of an instant payment
Different currencies in TIPS
Currencies other than the euro can be used for settlement in TIPS if the central bank concerned is connected to the platform and willing to add its currency.