Clearing House Interbank Payment System Definition - The Clearing House Interbank Payment System, commonly referred to as CHIPS, is a privately owned funds transfer system that clears and settles time-sensitive, high-value payments between the world‘s major banks. This clearinghouse processes nearly 96% of the dollar-denominated payments moving between countries around the world, including trade-related payments and foreign exchange trades. CHIPS, which is operated by the Clearing House Payments Co. LLC in New York City, has operated since 2001 as a real-time clearing and settlement system. Together with the Fedwire Funds Service, which is operated by the Federal Reserve Banks, CHIPS forms the primary U.S. network for large-value domestic and international "USD" payments. Only the largest banks dealing in U.S. dollars participate in CHIPS. About 70% of these are non-U.S. banks. Smaller banks have not found it cost effective to a direct member of the Clearing House Interbank Payment System, but many have accounts at CHIPS-participating banks to send and receive payments.