# TIPS
> TARGET Instant Payment Settlement — the ECB's instant settlement service
Central-bank-money instant payment settlement platform operated by the ECB since 2018. Settles SCT Inst payments between PSPs in a matter of seconds, 24/7/365. A cornerstone of Europe's Instant Payments infrastructure.
_Category: technique_
---
## Definition
**TIPS** (_TARGET Instant Payment Settlement_) is the platform that settles instant payments in central bank money, operated by the ECB since November 2018.
It is the reference infrastructure for settling SCT Inst payments between euro-area PSPs, 24/7/365, in a matter of seconds and with no counterparty risk (the liquidity used is central bank money). TIPS is one of the Eurosystem's three TARGET platforms, alongside T2 (large-value payments) and T2S (securities). It coexists with RT1 (EBA Clearing), and the two are interoperable.
## How it works
```mermaid
sequenceDiagram
autonumber
participant Alice
participant PSP_A as Alice's PSP
(e.g. BNP)
participant TIPS as TIPS (ECB)
participant PSP_B as Bob's PSP
(Deutsche Bank)
participant Bob
Alice->>PSP_A: 1. Instant transfer of €200
PSP_A->>PSP_A: 2. Checks (KYC, AML, VoP, funds)
PSP_A->>TIPS: 3. pacs.008 SCT Inst
TIPS->>TIPS: 4. Checks PSP_A liquidity
(TIPS technical account)
TIPS->>TIPS: 5. Debits PSP_A,
credits PSP_B
(ECB money)
TIPS->>PSP_B: 6. Credit notification
PSP_B->>Bob: 7. Credits account (instant)
PSP_B-->>TIPS: 8. pacs.002 ACK
TIPS-->>PSP_A: 9. Final ACK
PSP_A-->>Alice: 10. Send confirmation
```
Guaranteed timing: under 10 seconds end-to-end (the ECB target), often under 5 in practice.
## Technical characteristics
- **Standard**: ISO 20022 (`pacs.008`, `pacs.002`, `pacs.004`).
- **Availability**: 24/7/365.
- **Currencies**: EUR (since 2018), SEK (2024), DKK (2025).
- **Cap**: none imposed by TIPS; the limit is set by the SCT Inst scheme (€100,000 by default).
- **Liquidity**: one technical account per participant, funded from T2 during business hours.
- **Transaction-by-transaction settlement**, with no batching.
## TIPS vs RT1
| Aspect | TIPS (ECB) | RT1 (EBA Clearing) |
|--------|------------|--------------------|
| Operator | ECB | EBA Clearing (private) |
| Liquidity | Central bank money | Common commercial bank money |
| Availability | 24/7 | 24/7 |
| Cap | €100k (configurable) | €100k (configurable) |
| Risk | None (ECB) | Low (EBA mechanisms) |
The two coexist and are interoperable: the end user receives a standard SCT Inst regardless of which rail is used.
## TIPS vs FedNow vs Pix vs UPI
| System | Region | Operator | Launch | Volume |
|---------|------|-----------|-----------|--------|
| TIPS + RT1 | Euro area | ECB + EBA Clearing | 2018 + 2017 | growing fast |
| FedNow | US | Fed | 2023 | ramping up |
| Pix | Brazil | BCB | 2020 | ~6bn tx/month |
| UPI | India | NPCI | 2016 | ~17bn tx/month |
The EU still lags on volume adoption despite a mature infrastructure — which is exactly what the IPR addresses by making SCT Inst mandatory and priced like a regular SCT by October 2025.
## The IPR and its link to TIPS
The IPR (EU 2024/886) requires every euro-area PSP to offer SCT Inst (first receiving, then sending) at a cost no higher than a regular SCT, with mandatory VoP and daily sanctions screening. The consequence: an expected surge in volumes on TIPS and RT1 after October 2025.
## What TIPS is not
- **Not a wallet**: it is interbank infrastructure, invisible to the general public.
- **Not a scheme**: it is the settlement rail, the scheme being SCT Inst (EPC).
- **Not a payment service**: no direct customer API, access is via PSPs.
- **Not universal**: EUR, SEK and DKK only — for USD it's FedNow and RTP.
- **Not mandatory for SCT Inst**: a PSP can route through RT1 instead.
## Within the PSD2 / Open Finance ecosystem
TIPS is the underlying infrastructure for PIS (an SCT Inst initiated via PSD2 settles there instantly), for Wero/EPI (P2P and merchant), for embedded finance and for dynamic B2B invoicing (Karmen, Defacto advance cash as SCT Inst).
## Real-world examples
- **Launch**: 30 November 2018, the first cross-border SCT Inst in the euro area.
- **Cost**: ~€0.002 per transaction (a "coverage costs" model).
- **2024 volume**: ~30m transactions per month, growing fast with the IPR.
- **Wero**: P2P payments settle over TIPS or RT1, instantly and free of charge.
- **SEK**: since February 2024, the Riksbank settles its SEK instant payments on TIPS.
- **Digital euro**: the ECB could rely on TIPS to settle a retail CBDC.
- **Advantage over cards**: instant settlement, no chargebacks, near-zero cost — a long-term threat to the Visa/Mastercard model.
## Sources
- [TARGET Instant Payment Settlement (TIPS)](https://www.ecb.europa.eu/paym/target/tips/html/index.en.html) — European Central Bank
- [TIPS facts and figures](https://www.ecb.europa.eu/paym/target/tips/facts/html/index.en.html) — European Central Bank
---
Source: https://openfinanceguide.com/en/glossary/tips