TIPS is an acronym to keep in mind. Stands for Target Instant Payment Settlements and the way we think about electronic payments could change in the coming years.
It is a new system of payment settlement instant payments in euros which was launched today, November 30, in Rome at the Donato Menichella Center of the Bank of Italy. The place was not chosen at random given that the infrastructure was developed in 12 months by Bank of Italy technicians on behalf of the Eurosystem and, according to Governor Ignazio Visco, "it has the objective of becoming a benchmark". This system, he added, "will promote efficiency in market infrastructures by offering its services to banks across Europe".
The event was attended not only by Visco, but also by Yves Mersch, member of the executive committee of the ECB and the director general of the Bank of Italy, Salvatore Rossi.
TIPS: WHAT IS IT
TIPS is a pan-European instant payment system that has the uniqueness of being made in central bank money, which means that the payment takes place directly through the accounts held by the banks involved with their respective central banks, thus replacing cash (cash without cash). In practice, the exchange of a payment via TIPS is equivalent to the direct exchange of coins and banknotes.
It all happens very quickly. In fact, the system developed by Bankitalia allows you to process a payment in less than 10 seconds, 24 hours a day, 24 days a year, without necessarily having to respect the opening and closing hours of your bank.
“TIPS – explained Visco – is built on a modern and advanced technical solution, specifically developed for the purpose of settling instant payments and designed to guarantee an end-to-end processing time of 10 seconds or less and to support large volumes of transactions” .
From today on, this new system will be available to banks that want to adopt it, offering their customers an instant payment service which for the moment will only be in euros, even if - underlines Via Nazionale - any other currency can be used in the future.
TIPS: THE COST
The purpose of instant payments is to be used "in daily transactions to replace other instruments such as payment cards or cash" underlines Bankitalia, therefore since 2016, the year in which TIPS was created, one of the fundamental principles has been that Of keep costs down operational and development. In doing so, it was therefore possible to launch order costs at an equally low level. For each individual transaction they will be enough 0,2 cents: 1 euro is enough “to settle 500 transactions”.
THE FUTURE OF TIPS
The launch of TIPS is not a milestone, but a starting point. Its diffusion among European citizens will now depend on the speed with which commercial banks will be able to use the new service. To join, the same rules valid for TARGET 2, the main European platform for the real-time settlement of large-value payments owned by the Eurosystem, of which the TIPS are in fact considered an extension, must be respected. In Italy, for example, Sia has already acquired certification to provide access to Tips.
In the coming years therefore, five years is the monitoring target, every bank in Europe could be equipped with this system, making instant payments a consolidated habit for all institutions (today instant payment systems are instead developed privately by individual banks, without integration and homogeneity at the continental level) and for all citizens of Europe.
