What do Participating Service Providers (PSPs) need to do to operate TIPS?

Participating Service Providers (PSPs) must dedicate liquidity at their central bank to operate within the TARGET Instant Payment Settlement (TIPS) system. TIPS is designed to enable real-time euro payments, and liquidity is essential for ensuring that transactions can be settled instantly.

When a PSP participates in TIPS, they need to ensure they have sufficient liquidity available in their central bank accounts. This is necessary since TIPS operates on a real-time gross settlement basis, meaning transactions are settled immediately as they occur. Adequate liquidity allows PSPs to meet the demands of instant payments while minimizing the risk of payment failures due to insufficient funds.

This requirement reflects the broader operational framework of TIPS, emphasizing the importance of liquidity management for efficient transaction processing in euro payments.