What is TARGET Instant Payment Settlement (TIPS)?

Introduction and European context

TIPS is part of the Eurosystem’s TARGET Services and is operated by the European Central Bank (ECB). Launched in 2018, its goal is to provide a unified infrastructure for instant payments across Europe.

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Unlike traditional RTGS systems, which typically operate during business hours, TIPS was designed for continuous settlement to allow individuals and businesses to send and receive euro payments instantly, regardless of their bank's location.

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It supports the SEPA Instant Credit Transfer standard. TIPS settles each payment individually and continuously throughout the day and night. This cross-border reach removes the fragmentation that previously existed between national instant payment systems.

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How TIPS works

TIPS connects participating banks and payment service providers (PSPs) through the Eurosystem’s central infrastructure. Each participant holds a dedicated cash account (DCA) in central bank money. When a payment is initiated, funds are instantly transferred from the payer’s DCA to the recipient’s, completing settlement within seconds.

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Because all transactions occur in risk-free central bank money, TIPS eliminates counterparty and settlement risk. TIPS currently supports payments in euro and Swedish krona (SEK), with the platform designed to handle additional currencies as adoption expands.

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TIPS vs. traditional systems and liquidity management

While both TIPS and traditional RTGS systems (like T2) settle transactions individually and in central bank money, the key difference is timing: RTGS operates during business hours, whereas TIPS functions around the clock. TIPS is also optimized for lower-value, higher-volume payments, complementing RTGS systems used for interbank and high-value settlements.

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For banks, liquidity management is tightly linked to their T2 accounts. Funds are pre-funded into TIPS accounts to ensure instant settlement at any time. The Eurosystem provides automated tools to top up or deplete these TIPS balances from central bank accounts, ensuring smooth operations and optimal liquidity usage across both systems.

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Benefits and drawbacks of TARGET instant payment settlement

TIPS offers major advantages for both banks and their corporate clients, but it also introduces specific operational considerations.

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One of its biggest benefits is immediacy. Payments are settled instantly, around the clock, every day of the year. All transfers take place in risk-free central bank money, providing full security and finality for both domestic and cross-border payments within SEPA. 

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However, TIPS also has drawbacks. Participating banks must pre-fund their dedicated cash accounts (DCAs) to ensure instant payment availability. If funds are not continuously maintained in these accounts, payments cannot be processed, tying up capital that could otherwise be used or invested elsewhere.

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A final consideration is connectivity. While TIPS provides pan-European reach, businesses still depend on their bank or payment service provider to maintain the necessary technical integration with their ERP and treasury systems. Seamless connectivity is essential to ensure that instant payments translate into immediate cash visibility and accurate reporting.

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How Atlar can help with TIPS connectivity

Atlar connects directly to banks to provide real-time visibility into outgoing and incoming payments across multiple schemes, including SEPA and other instant payment rails. By integrating settlement data from connected banks, Atlar ensures that instant transactions are reflected immediately in cash positions and forecasts.

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With live transaction updates, automated reconciliation, and centralized liquidity views, finance teams can monitor instant payments alongside all other cash movements in one platform. For banks connected to TIPS, Atlar can work with your banking partners to enable visibility and automation for those payments as part of your setup.

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See how Atlar delivers real-time liquidity and payment visibility across all your bank connections, book a demo with our team.