What Is CHIPS? 

CHIPS (Clearing House Interbank Payments System) is the largest private-sector clearing and settlement system for US dollar payments in the world. It handles high-value domestic and international wire transfers between major banks, settling roughly $1.9 trillion per business day.

Together with the Federal Reserve's Fedwire service, CHIPS makes up the primary network for large-value USD payments, covering about 96% of the market. While Fedwire is run by the government, CHIPS is privately owned and operated by The Clearing House, a cooperative of the roughly 42 financial institutions that participate in the network.

Banks typically choose CHIPS over Fedwire for payments that don't need to settle instantly, because CHIPS is cheaper. The reason comes down to how it processes payments: instead of settling each one individually, CHIPS uses a netting system that dramatically reduces the amount of money banks need to move.

How does CHIPS process payments?

CHIPS uses a method called multilateral netting. Rather than sending every payment separately (like Fedwire does), CHIPS groups payments together and offsets them against each other. Only the net difference moves between banks.

Here's a simple example of how netting works:

• Bank A owes Bank B $1.2 million
• Bank B owes Bank A $800,000
• Instead of two separate payments, CHIPS nets them into one: Bank A pays Bank B $400,000

This approach saves a massive amount of liquidity. In 2024, CHIPS achieved a 29:1 liquidity efficiency ratio, meaning every $1 of funding contributed to the network supported $29 in settled payment value. That translated to over $5.14 billion in annualized economic savings for participants.

CHIPS operates Monday through Friday, from 9 a.m. to 6 p.m. Eastern Time. Payments are matched and netted continuously throughout the day, with final settlement happening before the close of the business day through Fedwire.

What types of payments does CHIPS handle?

CHIPS is built for high-value transactions. Over 95% of cross-border US dollar interbank payments flow through the system. The main payment types include:

• FX settlements: the dollar side of foreign exchange trades between global banks
• Interbank transfers: correspondent banking settlements, nostro account funding, and liquidity management
• Corporate payments: large supplier payments, capital investments, and dividend payouts from multinational companies
• Securities settlements: the cash side of bond and equity transactions

In late 2024, CHIPS set a single-day record of 1,083,550 payments worth $2.63 trillion.

How does CHIPS compare to Fedwire?

Both CHIPS and Fedwire handle large-value USD payments, but they work very differently:

• Settlement method: Fedwire uses real-time gross settlement (each payment settles individually and instantly). CHIPS uses multilateral netting (payments are grouped, offset, and the net amount settles)
• Cost: CHIPS is cheaper because netting reduces the number of actual fund transfers. Fedwire charges per transaction with no netting benefit
• Speed: Fedwire settles in real time. CHIPS settles throughout the day, with final settlement by end of day
• Operating hours: Fedwire runs 21.5 hours per day. CHIPS runs from 9 a.m. to 6 p.m. ET
• Ownership: Fedwire is operated by the Federal Reserve. CHIPS is privately owned by its member banks

For time-sensitive payments that need instant finality, Fedwire is the choice. For high-value transfers where cost efficiency matters more than immediate settlement, CHIPS is the preferred rail.

How does CHIPS relate to SWIFT?

SWIFT and CHIPS serve different roles. SWIFT is a messaging network. It sends payment instructions between banks around the world but doesn't actually move money. CHIPS is a clearing and settlement system. It processes and settles the actual USD payments.

In practice, a cross-border USD payment often uses both: SWIFT carries the message, and CHIPS settles the funds. This is why international wire transfers routed through correspondent banks can take multiple days and accumulate fees at each step.

What are CHIPS's limitations for fintechs?

CHIPS is built for large banks, not fintech companies. Several constraints make it difficult for fintechs to use directly:

• Restricted access. Only the ~42 member banks can participate directly. Everyone else must route payments through a member bank acting as a correspondent, adding cost and delays
• High-value focus. CHIPS is designed for large transactions between financial institutions. It's not practical for high-volume, lower-value payments like payroll or marketplace disbursements
• Limited hours. CHIPS only operates during US business hours on weekdays. There's no 24/7 availability
• No real-time settlement. Netting is efficient, but final settlement happens at end of day. For use cases that need instant confirmation, CHIPS doesn't deliver

For fintechs building cross-border payment products, these constraints push them toward alternatives that offer broader access, faster settlement, and lower costs for everyday transaction volumes.

Move money faster than correspondent banking allows

CHIPS and Fedwire are critical infrastructure for the banking system, but fintechs don't have to route every international payment through them. Stablecoin settlement and direct local payment rails can bypass the correspondent banking chain entirely, offering instant settlement, transparent FX, and coverage in markets where traditional wires are slow and expensive.

Due's payment API connects fintechs to local rails in 80+ countries through a single integration, settling in minutes where CHIPS-routed correspondent transfers take days.