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Clearing House Interbank Payments Company (CHIPS) is a bank-owned payments system that clears large-value payments in real time.
It is categorized as an electronic, final-payment system for U.S. dollars. CHIPS encompasses the majority of dollar payments made worldwide, and includes currency exchanges and foreign trade payments. CHIPS is the world leader for wire transfer payments and carries a reputation of accuracy and efficiency. CHIPS customers include financial institutions and corporations celebrating its 40th anniversary in 2010.
CHIPS is a financially secure organization, and it doesn't permit its members to go under a zero balance, hence avoiding daylight overdraft charges that negate cost efficiency. For corporations, CHIPS makes secure wire payments to businesses or individuals. Banks can assist in determining whether it's faster for a customer to use CHIPS or Fedwire based on constant updates of electronic payment system activity within the banks. That way, the customer is assured of the fastest, most efficient money wire transfer.
CHIPS uses online management tools for which the netting process begins at 9 p.m. Eastern Time, when the Fed opens for prefunding and CHIPS opens for payment processing. From 9 a.m. to 5 p.m. banks send and receive payments. During that time, CHIPS nets and releases payments. From 5 p.m. until 5:15 p.m. the CHIPS system eliminates credit limits, and releases and nets unresolved payments. By 5:15 p.m., CHIPS releases any remaining payments and sends payment orders to banks via Fedwire.