TIPS - TARGET Instant Payment Settlement The Pan-European Infrastructure for the Settlement of Instant Payments
Massimiliano Renzetti, Serena Bernardini, Giuseppe Carlo Marino, Luca Mibelli, Laura Vásquez de Ricciardi, Giovanni Maria Sabelli · RePEc: Research Papers in Economics · 2021
On 21 November 2017, the European Payments Council (EPC) introduced a new scheme for instant payments (SEPA Instant Credit Transfer- SCT Inst) in the Single Euro Payments Area (SEPA). The new scheme envisaged a maximum execution time of 10 seconds for the processing of each transaction and guaranteed service availability every day of the year, 24 hours a day. One year later, on 30 November 2018, Banca d’Italia – which had been commissioned by the Eurosystem to develop the system – delivered TIPS (TARGET Instant Payment Settlement), a new service for the settlement of instant payments in central bank money, which was also compliant with the SCT Inst scheme. Conceived as a multi-currency settlement platform, TIPS was developed with the aim, inter alia, of fostering the integration of retail payment services offered by the European financial community and of eliminating barriers due to lack of interoperability between different settlement platforms. The TIPS project is part of the Vision 2020 programme, which the Eurosystem has devised with the aim of providing new services to support financial markets, citizens, and businesses in Europe and to foster the innovation of market infrastructures and harmonization of financial services related to securities and cash. The Vision 2020 programme is part of the European Commission's Capital Markets Union project, aimed at achieving full integration of the European financial market. Building TIPS required the fulfilment of a number of particularly challenging technical requirements: virtually instant payment execution (with processing times per payment not exceeding 5 seconds); the capacity to handle a large volume of processed payments (over 43 million transactions per day); very high availability and resilience (reaching 99.9% service availability, and the capacity to restart within 15 minutes in a site disaster scenario); extreme scalability of the system from a performance viewpoint (the ability to sustain a doubling of the volume of payments over a year). About two years after the go-live, the number of payments settled in TIPS still falls short of these expectations and the potential of the service. However, albeit at different speeds in the various European countries, instant payment services are growing and it is reasonable to expect that this trend will only increase in the years to come. It is in this context that Banca d’Italia has already identified a series of actions that aim to prepare TIPS to become an essential component of the foreseeable spread of instant payment services in Europe. This paper is organized as follows: Chapters 1 and 2 illustrate the evolution of instant payment services in Europe and the fundamental principles of the TIPS service, respectively. Chapter 3 gives a detailed description of the TIPS system, outlining its functional perimeter (Section 3.1), presenting the technical characteristics of the platform on which it operates (Section 3.2), as well as the monitoring and management activities for the smooth operation of the service (Section 3.3). The governance of TIPS and the procedures for joining the service are then set out in Chapters 4 and 5. Finally, Chapter 6 outlines the main trends that Banca d’Italia, on the recommendation of the Eurosystem, has identified for TIPS for the years to come, both in terms of activities that are already in progress or being planned (Section 6.1), and with reference to other potential functionalities to be offered to the users in the near future (Section 6.2).