GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
PAYMENTSSIGNAL

The interactive academy for the standards, messages, and rails that move money.

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CHIPS (US NETTING)

Held for a net position: a CHIPS payment waiting to net

Trigger: Bank Alfa's outgoing CHIPS payments exceed its incoming ones, so there is no net room to release the payment yet.

Contributor Shubham Mathure

What operations sees first: A payment sits in the CHIPS queue waiting for offsetting flows, rather than settling one-for-one.

WHERE IS THE MONEY?

Debited from the originator; the beneficiary is paid once offsetting flows let CHIPS release the payment.

DID SETTLEMENT HAPPEN?

The payment waited in the queue for a net position rather than settling gross — the essence of liquidity-saving netting.

WHO ACTS NEXT?

CHIPS (The Clearing House) Participants manage the timing of their outgoing payments so queues clear well before the close.

PLAY THE EXCEPTION

Trigger: Bank Alfa's outgoing payments exceed its incoming ones, so there is no room to release the payment yet.

STEP 1 / 7MESSAGE

The originator requests a payment

Originator (payer) → Bank Alfa (sending participant)

A corporate treasury asks Bank Alfa to pay a beneficiary at another CHIPS participant. Bank Alfa validates and screens it before submitting.

Step 1 of 7: The originator requests a payment

  1. 01Message
    The originator requests a paymentOriginator (payer) → Bank Alfa (sending participant)
  2. 02Posting
    Bank Alfa debits the originatorBank Alfa (sending participant)
  3. 03Message
    Bank Alfa submits the payment to CHIPSBank Alfa (sending participant) → CHIPS
  4. 04 · EXCEPTION PATHProcessing
    CHIPS holds the paymentCHIPS
  5. 05 · EXCEPTION PATHMessage
    An incoming payment arrivesCassia Bank (receiving participant) → CHIPS
  6. 06 · EXCEPTION PATHClearing obligation
    The queued payment is releasedCHIPS
  7. 07 · EXCEPTION PATHPosting
    The beneficiary is creditedCassia Bank (receiving participant)
  8. OUTCOME
    Funds
    Debited from the originator; the beneficiary is paid once offsetting flows let CHIPS release the payment.
    Settlement
    The payment waited in the queue for a net position rather than settling gross — the essence of liquidity-saving netting.
    Who acts next
    CHIPS — Participants manage the timing of their outgoing payments so queues clear well before the close.
Full step-by-step text (works without JavaScript)
  1. 01Message
    The originator requests a paymentOriginator (payer) → Bank Alfa (sending participant)

    A corporate treasury asks Bank Alfa to pay a beneficiary at another CHIPS participant. Bank Alfa validates and screens it before submitting.

  2. 02Posting
    Bank Alfa debits the originatorBank Alfa (sending participant)

    The customer's account is reduced when the bank accepts the payment. The interbank leg is handled separately through CHIPS.

    • DR Originator's account at Bank Alfa — USD 3,000,000.00
  3. 03Message
    Bank Alfa submits the payment to CHIPSBank Alfa (sending participant) → CHIPS

    The payment joins the CHIPS system, which will hold it until it can be released against the participants' running net positions.

  4. 04 · EXCEPTION PATHProcessing
    CHIPS holds the paymentCHIPS

    Rather than force gross funding, CHIPS keeps the payment queued until offsetting payments improve the net position.

  5. 05 · EXCEPTION PATHMessage
    An incoming payment arrivesCassia Bank (receiving participant) → CHIPS

    A payment in the other direction lands, moving Bank Alfa's net position back into a range where the queued payment can be released.

  6. 06 · EXCEPTION PATHClearing obligation
    The queued payment is releasedCHIPS

    With the position restored, CHIPS releases the payment, final, and the receiving bank can credit its customer.

  7. 07 · EXCEPTION PATHPosting
    The beneficiary is creditedCassia Bank (receiving participant)

    The release makes the payment final, so Cassia credits its customer once the queue clears.

    • CR Beneficiary's account at Cassia — USD 3,000,000.00
  8. OUTCOME
    Funds
    Debited from the originator; the beneficiary is paid once offsetting flows let CHIPS release the payment.
    Settlement
    The payment waited in the queue for a net position rather than settling gross — the essence of liquidity-saving netting.
    Who acts next
    CHIPS — Participants manage the timing of their outgoing payments so queues clear well before the close.

THE TIMELINE

  1. 01Bank Alfa (sending bank)
    Submits a CHIPS payment, but its position does not yet allow release.
  2. 02CHIPS (The Clearing House)
    Holds the payment in the queue until offsetting incoming payments create room to release it on a net basis.

    CHIPS saves liquidity by netting: a payment waits for a net position rather than settling gross.

  3. 03CHIPS
    Offsetting payments arrive and CHIPS releases the queued payment against the improved net position.
  4. 04Nordbank (receiving bank)
    Credits the beneficiary once CHIPS releases the payment.

Resolution: CHIPS is a liquidity-saving netting system: a payment waits for a net position and is released when offsetting flows allow, rather than settling gross one-by-one.

LEARN THE CONCEPTS

Sources for this scenario2
  1. Official requirement

    CHIPS ↗ — The Clearing House · netting / queue release

    Describes CHIPS, the private-sector US dollar high-value clearing and settlement system operated by The Clearing House. · Checked 2026-07-12

    CHIPS migrated to ISO 20022 messaging in April 2024; participant rules are not fully public.

  2. Simplified educational illustration

    Payments Signal editorial teaching models — Payments Signal

    This site's own simplified teaching models. · Checked 2026-07-12

    What this simplifies: Single-cycle teaching model; participant-specific handling and exact timings vary.

    Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.