TARGET instant payment settlement (TIPS)
What are instant payments?
In December 2014, the Euro Retail Payments Board (ERPB) has published a definition of instant payments (real-time retail payments). Following this definition, the processing of instant payments essentially covers the following points.
Electronic retail payment solution in euro
Immediate or close-to-immediate interbank clearing
Immediate or close-to-immediate crediting of the payee’s account
the underlying payment instrument
clearing arrangement: bilateral interbank clearing; clearing via clearing houses or real-time gross settlement systems
settlement method: commercial bank or central bank money; pre-financing; guarantees
Based on this definition, the European Payments Council (EPC) has developed a new European payment scheme: The SEPA Instant Credit Transfer Scheme (SCTInst scheme).
This scheme, which was launched in November 2017, specifies that funds must be made available to payees immediately. Unsuccessful credit transfer orders will be rejected immediately. There will be a time limit of ten seconds for instant payments from the time the order is validated by the payer’s payment service provider. The scheme will generally apply up to a maximum amount of €15,000. Payment service providers offering instant credit transfers must be able to process these payments around the clock, every day of the year.
The Eurosystem follows two complementary approaches to support the new scheme. As a first step, TARGET2’s ancillary system interface was enhanced to allow ACH (automated clearing house) operators to settle instant credit transfers by procuring cover in TARGET2 using central bank money. In addition, the Eurosystem itself will offer to settle instant credit transfers via its new TARGET instant payment settlement (TIPS) service from November 2018.
TARGET Instant Payment Settlement (TIPS)
TIPS is a harmonised and standardised pan-European service for settling payments in central bank money, with high capacity and around-the-clock availability. By introducing TIPS, the Eurosystem extends the services offered by TARGET2 and contributes to a pan-European reachability for payments based on the new SCTInst scheme.
Following the project’s investigation phase which ran until end-June 2017 and a public consultation of the user requirements, the Governing Council of the ECB decided on 21 June 2017 to realise TIPS. The service is scheduled to become operational in November 2018. Fees will be capped at 0.2 cent per transaction during the first two years of operation. There will be no account management fees or other fixed fees.
TIPS task force (work completed)
The TIPS task force was set up to analyse the Eurosystem’s undertaking. Its mandate was to define the user requirements of a future instant payment service, which were released for market consultation at the beginning of 2017.
The task force was implemented to involve the market and therefore comprised representatives of banks, ACHs and the Eurosystem. All documents relating to TIPS task force meetings are publicly available.
TIPS contact group
With the completion of the user requirements, the work of the TIPS task force came to an end. The TIPS contact group was established as the market contact group to assist in realising the project. This group comprises representatives from banks, central banks, service providers and the ECB. A thematic focus is to plan and prepare the launch of TIPS. The members of the group advise the Eurosystem on the preparation of important documents and specifications, such as the User Detailed Functional Specifications (UDFS) or the User Handbook (UHB). All meeting documents, other documentation and specifications processed by the TIPS contact group are published on the website and can be accessed via the link to "meeting documentation".