Finance leaders are empowering their teams with generative AI. Learn how in our new tech talk.Watch Now →


What is TARGET Instant Payment Settlement (TIPS)?

Welcome to Learn, where we provide straightforward, easy-to-understand definitions of the payments industry.

Follow us

TARGET Instant Payment Settlement (TIPS) was launched by the Eurosystem in November 2018 as a market infrastructure service that settles instant payments. It enables instant transaction settlement in central bank money across Europe.

The service works year-round and around the clock, so both businesses and individuals can send and receive money regardless of whether local banks are open. The service was developed as an extension of TARGET2, the real-time payments system owned and operated by the Eurosystem.

While TIPS currently only settles transactions in euros, the central banks of countries like Denmark, Sweden, and Norway have shown interest in joining the system but settling payments in their respective national currencies.

What does TARGET Instant Payment Settlement (TIPS) do?

Many countries have developed national solutions for instant payments as consumer demand grows, especially in the European Union (EU). With the possibility that multiple proprietary, national, or closed-loop systems that don’t work well together might be developed, TIPS unifies instant payments by offering instant payment settlement to any bank account holder in Europe.

Since TIPS is an extension of TARGET2, which has a robust and established network across Europe, its reach is fairly broad. TIPS is also formulated off of the SEPA Instant Credit Transfer (SCT Inst). The SCT Inst scheme was developed by the European Payments Council (EPC) under mandate by the Euro Retail Payments Board (ERPB) to facilitate unified instant pan-European credit transfers and is expected to have a large and growing number of European users.

How TARGET Instant Payment Settlement (TIPS) Work?

TARGET Instant Payment Settlement increases the speed of payments in the EU. Before TIPS, it could take up to a full business day for payments to reach the recipient. With TIPS, funds are available right away, no matter the day or time.

Participating banks and payment providers have a dedicated account with their central bank. Part of the liquidity of this account can be set aside for settling instant payments. However, banks and payment providers can only add funds to their TIPS account during TARGET2 operating hours. Since these entities are required to have a minimum reserve, the balance on these accounts will be counted toward that amount.

Institutions must be eligible to access central bank money since that is how TIPS settlement occurs. Opening a TIPS account in euros requires institutions to meet the same eligibility requirements called for in TARGET2. A member can then transact through TIPS:

  1. The sending participant initiates an SCT Inst payment transaction message to TIPS.
  2. TIPS validates the message and reserves the transfer amount.
  3. TIPS pushes the transaction to the recipient for acceptance.
  4. The recipient sends an acceptance reply to TIPS.
  5. TIPS settles the transaction.
  6. TIPS confirms settlement to the sender.
  7. TIPS confirms settlement to the recipient.

TARGET Instant Payment Settlement (TIPS) will allow for transactions to settle in 10 seconds or less and support large volumes of transactions. No maintenance windows and around-the-clock availability mean that businesses and individuals can enjoy instant transactions on any day and at any time, without interruption.

Try Modern Treasury

See how smooth payment operations can be.

Talk to sales
More from


Learn topic image

Learn how money moves throughout different countries around the world.

A Canadian EFT (or Electronic Funds Transfer) is a bank-to-bank transfer in Canada, similar to ACH in the US.

Read more

Part of the FedACH system, FedGlobal ACH offers low-cost and efficient cross-border ACH payments.

Read more

A SWIFT code, also known as a SWIFT ID or Bank Identifier Code (BIC), is a unique 8-11 character code assigned to a bank for SWIFT wire transfers.

Read more

US companies moving money internationally will likely weigh the pros and cons of SWIFT vs. Global ACH when it comes to attributes like speed and cost.

Read more

Payment rails are the underlying systems and networks that facilitate the movement of funds between parties in financial transactions.

Read more

Pix is Brazil’s instant payment platform that launched on November 16, 2020. Created and managed by the Central Bank of Brazil, Pix enables fast payments and transfers at any time, year-round.

Read more

SWIFT payments or international wires are global payments made through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network.

Read more

Global ACH can help companies move money from US-domiciled accounts across borders using local rails. Learn how and when to use this payment rail.

Read more

The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency under the jurisdiction of the US Treasury Department.

Read more

Real-Time Gross Settlement (RTGS) is a system for electronic payments between two banks, where the transactions process and settle in real time rather than being batched.

Read more

TARGET Instant Payment Settlement (TIPS) was launched by the Eurosystem in November 2018 as a market infrastructure service that settles instant payments.

Read more

An International ACH Transfer—also known as Global ACH—is an ACH payment made cross-border from a US-domiciled account.

Read more

Originally known as Bankers’ Automated Clearing System (BACS), BACS Payment Schemes Limited clears and settles direct debit, BACS direct credit, and current account switch service in the United Kingdom.

Read more

The Bulk Electronic Clearing System (BECS) is a streamlined electronic payment method used to process low-value, bulk transactions in Australia and New Zealand.

Read more

The Faster Payments Service (FPS) is a banking service in the United Kingdom. The FPS was instituted in order to reduce payment times between accounts held by different customers.

Read more

The Single Euro Payments Area (SEPA) is a system of payment schemas that standardizes cashless transactions in euros.

Read more

Unified Payments Interface (UPI) is a real-time payments system for mobile applications designed and launched by the National Payments Corporation of India.

Read more

Subscribe to Journal updates

Discover product features and get primers on the payments industry.




Modern Treasury For

Case Studies





Popular Integrations

© Modern Treasury Corp.