CIPS

CIPS stands for Cross-Border Interbank Payment System. China launched it in 2015 to process international settlements in yuan through its own infrastructure. The system is overseen by China’s central bank.

How it works

CIPS has direct and indirect participants. Direct participants hold an account in the system and make payments themselves. Indirect participants work through direct ones. All participants are banks. A company cannot connect to CIPS: its payment goes through its own bank or the agent’s bank.

CIPS not only transmits messages but also settles payments. This is what sets it apart from SWIFT, which only transmits instructions. The CIPS message format is based on the ISO 20022 standard. Banks can send instructions to the system through its own channels or via SWIFT.

Where it is used

CIPS works with the yuan. If you pay a Chinese supplier in yuan, the payment may go through CIPS at one of its steps. For payments from Russia to China, it is one of the working routes alongside settlements through banks’ correspondent accounts. Russia’s SPFS, unlike CIPS, only transmits messages between banks, like SWIFT.

What to watch for

The existence of CIPS does not mean that any payment in yuan will go through. Chinese banks check payments with Russian involvement themselves and may return a transfer. It matters which bank the beneficiary uses, what goods are being paid for and how the payment purpose is filled in. The beneficiary’s name and bank details must be exactly as in the invoice.

In a deal through a broker, we select the route to China for the specific beneficiary and amount. More details: Payments to China and Payment route selection.