TIPS (TARGET Instant Payment Settlement)

TIPS (TARGET Instant Payment Settlement) is a service of the Eurosystem that settles instant payments in central bank money within seconds, at any time of day and on every day of the year. Banks and other payment service providers use it to complete transfers under the SEPA Instant Credit Transfer scheme. It went live on 30 November 2018.

TIPS is a settlement platform, not a payment scheme. The rules for an instant euro payment come from the SEPA Instant Credit Transfer scheme; TIPS is one of the places where the money actually moves between banks. It sits beside T2, the Eurosystem's large-value system, and draws its liquidity from it. Private clearing houses also process instant payments, and most now settle their positions in TIPS.

Picture a cashier's window that never closes. Ordinary bank transfers wait for the bank's office hours, so money sent on a Friday night may sit until Monday. TIPS is a window at the central bank that stays open around the clock, every day, so a payment sent at midnight on a Sunday arrives in seconds.

Banks fill a special drawer at that window with central bank money in advance. When a customer sends an instant payment, TIPS takes money out of the sending bank's drawer and puts it into the receiving bank's drawer straight away. Because the money is the central bank's own and the move happens at once, neither bank needs to worry that the other will fail to pay later.

The European Payments Council launched the SEPA Instant Credit Transfer scheme in November 2017, and the Eurosystem built TIPS so that those payments could settle in central bank money. It was designed as an extension of TARGET2, and the first payment, on launch day, went from a CaixaBank customer in Spain to a Natixis customer in France. The ECB set the fee at €0.002 per transaction for the first two years.

Early take-up was slow, because many banks reached each other only through private clearing houses that could not exchange payments. In 2020 the ECB decided that every bank in TARGET2 that had signed up to the instant scheme must also be reachable in TIPS, and that clearing houses must move their technical accounts there. By mid-2022 the eleven clearing houses offering instant payments had done so. Since March 2023, when T2 replaced TARGET2, TIPS accounts have been funded from banks' main accounts in T2's central liquidity management component.

Each participant holds a dedicated cash account in TIPS, funded from its main account in T2. Liquidity transfers between the two run during T2's opening hours, and TIPS keeps settling with the balance on hand when T2 is closed. The steps of a payment follow a fixed order:

1. The payer's bank sends an instruction, and TIPS checks it and reserves the amount on the payer's account.
2. TIPS forwards the payment to the payee's bank, which accepts or rejects it.
3. On acceptance, TIPS debits the payer's account and credits the payee's account, and both banks are told the outcome.

The scheme sets a ten-second target for the whole cycle. Once TIPS records the settlement, the payment is an irrevocable payment and enjoys payment finality. Messages follow the ISO 20022 standard. TIPS is multicurrency: it settled only in euros until February 2024, when Sveriges Riksbank brought the Swedish krona onto the platform for its own instant system, and the Danish krone followed in April 2025.

Credit institutions that can open accounts at a Eurosystem central bank join TIPS directly. Other payment service providers can join as reachable parties, using another participant's account for settlement while sending and receiving their own messages. Ancillary systems, mainly private automated clearing houses, also hold accounts. This structure is what gives TIPS pan-European reach: a bank reachable in TIPS can receive an instant payment from any other reachable bank, whichever clearing house each normally uses, which addresses a long-standing interoperability problem.

The EU's Instant Payments Regulation, Regulation (EU) 2024/886, made instant euro transfers a standard service. Payment providers in the euro area had to be able to receive instant payments by 9 January 2025 and to send them by 9 October 2025, at a price no higher than an ordinary transfer, with a free verification of payee check. The regulation also opened settlement systems to payment and e-money institutions. These rules raised instant payment volumes and, with them, the role of TIPS. As a Eurosystem service, TIPS is overseen by the ECB and designated under settlement finality law.

TIPS is the euro area's nearest equivalent to FedNow, the Federal Reserve's instant service launched in July 2023, which also settles in central bank money around the clock. The UK's Faster Payments takes a different approach: it clears in real time but settles net positions in the Bank of England's RTGS service several times a day. India's UPI is a customer-facing interface rather than a settlement platform. Among other real-time payment systems, TIPS stands out for serving several currencies and central banks on one platform.

• European Central Bank: TARGET Instant Payment Settlement (TIPS)
• Regulation (EU) 2024/886 on instant credit transfers in euro