GLOBAL PAYMENTS KNOWLEDGEISO 20022 / SWIFT / SEPA / MT / MX
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TIPS — TARGET Instant Payment Settlement

A euro instant payment settled individually in central bank money on TIPS, final and irrevocable in under ten seconds, any hour of any day.

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Contributor Shubham Mathure

STEP 1 / 7MESSAGE

Riya instructs an instant payment at 23:40 on a Sunday

Riya (payer) → Bank Alfa (originator PSP) · pacs.008

Riya asks Bank Alfa to send EUR 480.00 to Arjun. TIPS runs 24/7/365, so the late Sunday hour makes no difference — the clock starts here.

Step 1 of 7: Riya instructs an instant payment at 23:40 on a Sunday

  1. 01Message
    Riya instructs an instant payment at 23:40 on a SundayRiya (payer) → Bank Alfa (originator PSP) · pacs.008
  2. 02Posting
    Bank Alfa reserves funds on its TIPS accountBank Alfa (originator PSP)
  3. 03Message
    Bank Alfa submits the payment to TIPSBank Alfa (originator PSP) → TIPS (settlement service) · pacs.008
  4. 04Message
    Nordbank confirms it can credit ArjunNordbank (beneficiary PSP) → TIPS (settlement service) · pacs.002
  5. 05Settlement
    TIPS settles the amount in central bank money — final and irrevocableBank Alfa (originator PSP) → Nordbank (beneficiary PSP)
  6. 06Posting
    Bank Alfa releases the reservation and finalises Riya's debitBank Alfa (originator PSP)
  7. 07Posting
    Nordbank credits Arjun, who can spend at onceNordbank (beneficiary PSP)
MESSAGECLEARING OBLIGATIONSETTLEMENTPOSTING
Full step-by-step text (works without JavaScript)
  1. 01Message
    Riya instructs an instant payment at 23:40 on a SundayRiya (payer) → Bank Alfa (originator PSP) · pacs.008

    Riya asks Bank Alfa to send EUR 480.00 to Arjun. TIPS runs 24/7/365, so the late Sunday hour makes no difference — the clock starts here.

  2. 02Posting
    Bank Alfa reserves funds on its TIPS accountBank Alfa (originator PSP)

    Bank Alfa earmarks the amount against its pre-funded TIPS account before submitting. Settlement in central bank money must be covered up front — TIPS holds no credit line.

    • RESERVE Bank Alfa TIPS account — EUR 480.00
  3. 03Message
    Bank Alfa submits the payment to TIPSBank Alfa (originator PSP) → TIPS (settlement service) · pacs.008

    The reserved payment is handed to TIPS, which will individually settle it in central bank money the instant the beneficiary side confirms.

  4. 04Message
    Nordbank confirms it can credit ArjunNordbank (beneficiary PSP) → TIPS (settlement service) · pacs.002

    Nordbank validates the account and answers positively. This positive pacs.002 is what authorises TIPS to move central bank money between the two accounts.

  5. 05Settlement
    TIPS settles the amount in central bank money — final and irrevocableBank Alfa (originator PSP) → Nordbank (beneficiary PSP)

    TIPS moves EUR 480.00 from Bank Alfa's TIPS account to Nordbank's TIPS account individually, in central bank money, in under ten seconds. Because it is central bank money the settlement is final and carries no counterparty or settlement risk.

    • DR Bank Alfa TIPS account — EUR 480.00
    • CR Nordbank TIPS account — EUR 480.00
  6. 06Posting
    Bank Alfa releases the reservation and finalises Riya's debitBank Alfa (originator PSP)

    With settlement final, Bank Alfa turns the earmark into a booked debit on Riya's account. The reservation existed only to guarantee the money was there to settle.

    • RELEASE Bank Alfa TIPS account — EUR 480.00
    • DR Riya's current account at Bank Alfa — EUR 480.00
  7. 07Posting
    Nordbank credits Arjun, who can spend at onceNordbank (beneficiary PSP)

    Because the interbank leg already settled with finality in central bank money, Nordbank can make the funds available immediately — Arjun spends them with no settlement risk to unwind.

    • CR Arjun's current account at Nordbank — EUR 480.00

What this simplifies: One payment between two directly reachable PSPs on their own TIPS accounts; the exact scheme time limits, T2-to-TIPS liquidity management, and TIPS settlement in non-euro currencies are omitted.

LEARN THE CONCEPTS BEHIND THIS FLOW

Sources for this flow2
  1. Official requirement

    What is TIPS? (TARGET Instant Payment Settlement) ↗ — European Central Bank

    Describes TIPS, the Eurosystem service that settles instant payments in central bank money around the clock, in line with the SCT Inst scheme. · Checked 2026-07-12

    TIPS also settles instant payments in Swedish krona and Danish krone; detailed user documentation is published separately by the ECB.

  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: One originator PSP, one beneficiary PSP, and a single reservation on the TIPS account; exact time-window values, liquidity transfers between T2 and TIPS, and multi-currency settlement (TIPS also settles Swedish krona and Danish krone) are described qualitatively or omitted.

    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.