CHIPS

At start of each day, participants send $$$ to a central funding account. This $$$ pool allows CHIPS to settle faster, larger payments via multilateral netting.

• Multilateral netting: Offsets obligations across the entire network

• Bilateral netting: Offsets payment obligations between two banks

Bilateral netting: If your bank owes another bank $100 million, and that bank owes your bank $80 million, CHIPS nets these so only $20 million needs to move.

PATENT FLOW OF FUNDS

1. Bank funds CHIPS account

2. Bank adds optional supplemental

3. Bank A pays Bank B

4. CHIPS debits A credits B

5. Uses supplemental then primary

6. Queues if limits hit

7. End of day net and settle​

CHIPS vs. ACH

SEGMENT	CHIPS	ACH
Transaction size	High-value (typically millions)	Low to medium value
Processing speed	Same-day settlement	1–3 business days
Settlement method	Multilateral netting	Batch processing
Transaction volume	Lower volume, higher value	Higher volume, lower value
Cost structure	Higher per-transaction fee	Lower per-transaction fee
Use case focus	Large interbank transfers	Recurring payments, payroll
Payment initiation	Real-time submission	Batch file submission
Reversibility	Not reversible after settlement	Potentially reversible

CHIPS vs. SWIFT

CHIPS vs. Fedwire

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RESOURCES

GUIDELINES FOR FOREIGN EXCHANGE SETTLEMENT NETTING

What is Netting? How Does Netting Work?

CHIPS_Public_Disclosure_01-17-2025.pdf