What are the differences between the Fedwire and CHIPS payment systems? Why do FIS in the United States face a higher degree of international technology risk than do the FIS in other countries?

CHIPS differs from Fedwire payment system in following ways:

1. Fed is a part of regulatory body CHIPS is privately owned.

2. CHIPS has 47 member participants compared with 9289 banking institutions eligible to make and receive funds via Fedwire.

3. CHIPS clears payment or receipts on a net basis, there will be only one transaction. CHIPS is cheaper than Fedwire and is used to transfer less important financial transactions.

In case of CHIPS, payment will be nettef only at the end of the day.

Whereas, Fedwire follows real time gross settlement. If bank A has to transfer$ 100000 to bank B and bank B has to transfer $ 40000 to bank A. So both transactions will be executed seperately. There will be two transactions.

4. Fedwire is costlier than CHIPS and is used by

Important financial institutions who deals with immediate fund transfe in urgent basis.

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US in center place of technology and innovation and continues research on technology and innovation. New technology is emerging very fast in US than other countries.

US has been at the forefront in marketing, investment and financial services innovation in payment system. For eg- US has been a major pioneer of AYM, yet such networks have grown relatively slow in other countries such as Sweden and Singapore.

US financial services firms have been unable to transfer profitability their domestic Technological innovation in international market to gain competitive advantage. In contrast, foreign financial service firms entering the US market hain direct access to and knowledge of US technology based products at a very low cost.