FUN FACT: The Clearing House Interbank Payment System (CHIPS) turns 50 years old today!
When it opened for the first time, CHIPS ran on a single computer in the basement of the New York Clearing House headquarters. Since then, CHIPS has become one of the most valuable and critically essential elements of the global financial infrastructure.
The following letter was sent earlier today by Jim Aramanda, TCH President and CEO, to CHIPS participants to celebrate the systems 50th anniversary:
Today, The Clearing House (TCH) celebrates one of its most important anniversaries. The Clearing House Interbank Payment System (CHIPS) opened for the first time fifty years ago today, running on a single computer in the basement of the New York Clearing House headquarters. Since then, CHIPS has become one of the most valuable and critically essential elements of the global financial infrastructure. We want to pause on this day to recognize the importance of CHIPS to the payments industry and thank the many of you who made it so.
In its first year, CHIPS cleared and settled $3 million on average each day and now is the largest private sector USD clearing system in the world, clearing and settling nearly $1.7 trillion per day (more recently regular days >$2T). Volumes that average 460k continue to grow each year.
Over the years, CHIPS has been enhanced to meet the demands of business and to manage risk in the payments system. Its most unique – in fact, patented – feature is its payment matching algorithm launched in 2001, which enables clearing and settling of huge sums of payments in real-time using a minimal amount of liquidity. This liquidity-saving capability is so powerful, we are currently exploring ways to leverage it in other financial applications outside of CHIPS.
Not only has CHIPS performed well in its own right, it demonstrated in the early 1970’s that electronic payments were a safe and sound alternative to paper and, in fact, laid the groundwork for future TCH innovations, including: ACH, Check Image Exchange and most recently the RTP® network. In addition, the safe and reliable operation of CHIPS served to establish credibility for The Clearing House as it became, and continues to be, a respected voice on critical payments issues.
Time after time over its 50 years, CHIPS continued to operate without interruption in the most extreme circumstances: bank failures, 9/11 terrorist attack, blackouts, financial crisis, Hurricane Sandy and even now during a global pandemic.
The sustained success of CHIPS can be credited directly to the foresight and bold leadership of the TCH board members at the dawn of the computer age, the TCH team – then and now – working with the common goal of maintaining CHIPS as the preeminent payment system for high value payments, and CHIPS participants. Simply stated, CHIPS would not be celebrating this milestone without the loyal support of our participants and the volume they bring to keep CHIPS viable today and in the future.
We thank you and look forward to working with you to build the next 50 years of CHIPS, which is a future bright with possibilities.