What is the Clearing House Interbank Payments System?
The Clearing House Interbank Payments System, often referred to as CHIPS, is a transferal system that can be used to conduct financial transactions between different banks. The system is not to be confused with the Federal Reserve Wire Network, which is much larger and also is better suited for bank transfers that require a high degree of security and need to be processed quickly. However, the Clearing House Interbank Payments System remains a viable alternative for transfers that are more routine in nature and are somewhat less time sensitive. Not all banks and financial institutions are involved with the Clearing House Interbank Payments System. Still, the network is understood to process in excess of one trillion US dollars of transactions on any given business day. Because of the type of financial transfers made with the system, large corporations are more likely to make use of the Clearing House Interbank Payments System than small or mid-sized businesses. The system functions by
