Mastercard Joins TIPS Pilot for Faster Payments

Mastercard has taken another significant step in its push to modernise cross-border money movement, joining a pilot programme designed to enable instant cross-currency payments on the Eurosystem’s TARGET Instant Payment Settlement (TIPS) platform.

Mastercard joins TIPS pilot

The initiative, led by the European Central Bank in partnership with Danmarks Nationalbank and Sveriges Riksbank, seeks to extend the benefits of domestic instant payments into the cross-border arena by facilitating real-time transactions between the euro, Danish krone and Swedish krona.

Bringing Real-Time Settlement to Cross-Border Payments

Cross-border payments have long been criticised for being slower, more expensive and less transparent than domestic transactions. Multiple intermediaries, pre-funding requirements and varying settlement mechanisms often create delays and increase operational complexity.

The TIPS cross-currency pilot aims to address these challenges by allowing participating institutions to execute payments instantly across different currencies while settling directly in central bank money.

This approach has the potential to reduce both settlement and counterparty risk while improving transparency throughout the payment process.

Mastercard participated in the pilot through its global money movement platform, Mastercard Move, which was among the first solutions to process transactions using the new cross-currency functionality.

Atomic Settlement Reduces Risk

A key feature of the pilot was the use of atomic settlement between euros and Danish kroner. Under this model, both sides of the foreign exchange transaction are completed simultaneously, ensuring that either both legs settle together or neither settles at all.

This mechanism significantly reduces settlement risk, a long-standing concern in international payments and foreign exchange transactions.

The pilot also included the successful execution of inbound and outbound transaction flows under the One Leg Out Instant Credit Transfer (OCT Inst) framework.

Mastercard performed both entry-leg and exit-leg payment service provider roles within the cross-currency environment, demonstrating the operational viability of the model.

A New Connectivity Model for Banks and Fintechs

For banks, fintechs and payment providers, one of the most attractive aspects of the initiative is the ability to access central bank payment infrastructure without developing and maintaining direct connections themselves.

By leveraging Mastercard Move as an intermediary layer, institutions could potentially gain access to instant cross-border payment capabilities while reducing integration costs and operational complexity. The model may also improve liquidity management, lower funding requirements and provide greater certainty over payment outcomes.

Pratik Khowala, Global Head of Transfer Solutions at Mastercard, described the pilot as an important milestone in the evolution of international payments, arguing that cross-border transactions can increasingly deliver the same speed, transparency and predictability that consumers and businesses have come to expect from domestic payment systems.

Implications for the Future of Cross-Border Payments

The pilot reflects a broader industry trend towards modernising international payments through real-time infrastructure, central bank collaboration and enhanced interoperability.

As regulators and market participants continue to pursue faster and more efficient payment networks, initiatives such as TIPS cross-currency functionality could play an important role in reducing friction between domestic payment schemes and international money movement systems.

For Mastercard, the project also represents a strategic step towards expanding direct connectivity to payment infrastructures worldwide, creating new opportunities for instant cross-border payments across additional currencies and corridors in the years ahead.