CHIPS differs from the Fedwire payment system in three key ways. First, it is privately owned (by
The Clearing House Payments Company LLC), whereas the Fed is part of a regulatory body. Second, it is only accessible to a very small number of very large banks; it has just 47 member participants (with some merged banks constituting separate participants), compared with 9,289 banking institutions (as of March 19, 2009) eligible to send and receive funds via Fedwire. Third, it is a
netting engine (and hence, not real-time). A netting engine consolidates all of the pending payments into fewer single transactions. For example, if
Bank of America is to pay
American Express $1.2 million, and American Express is to pay Bank of America $800,000, the CHIPS system aggregates this to a single payment of $400,000 from Bank of America to American Express. The Fedwire system would require two separate payments for the full amounts ($1.2 million to American Express and $800,000 to Bank of America). ==Members==