CHIPS UID stands for Clearing House Interbank Payments System Universal Identifier. This is just a fancy name for an electronic clearinghouse database system, which facilitates the transfer of funds from both individual consumers and institutions.

It is the back end of the automated clearing house ACH network, which is run by the National Automated Clearing House Association, and it provides the platform that allows exchanges to take place quickly and accurately. Developed in the s, the key to the CHIPS UID system is that its database contains all the necessary information to identify specific participants, such as name, address, routing number, account numberetc.

However, all of this information is kept confidential within the system and each participant's information is linked to a six-digit code, which is referred to as the CHIPS UID. Because the CHIPS UID number can be used by the clearing system to look up the needed banking information of a payment's recipient e.

This simplicity reduces the occurrence of errors in transaction entry and speeds up the process for all parties.

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As well, because the CHIPS UID number is linked to but does not reveal banking information such as an account number, the structure of this clearing system prevents a biller from knowing a payer's banking information, which increases the security and confidentiality of the system. The CHIPS UID system processes both domestic and international transactions and has long been the foremost method of moving U.

To learn more about electronic transaction technologies, check out our Electronic Trading Tutorial and Introduction To Level II Quotes.

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Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. What does CHIPS UID mean? By Chris Gallant Share.

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