Georgia banks interested in learning about the cheapest way to electronically transfer funds to rural Mexico are invited to join a teleconference on Tuesday, June 28, 1:30-3 p.m., featuring Larry Schulz, vice president in the Federal Reserve Bank of Atlanta’s retail payments office.
“We’re offering an open system that… provides new ways of making payments to Mexico,” Dr. Schluz told GlobalAtlanta about the Fed’s new project that uses the Automated Clearing House system to send remittances to Mexican banks.
The Federal Reserve Bank is the larger of two operators of the ACH, a national automated payment system started in the 1970s that allows banks to automatically deposit payments into designated accounts. The transaction costs only one-quarter of one cent. Some nine billion payments are made per year in the United States using this system, Dr. Schulz said.
The Fed has linked the ACH here to its counterpart in Mexico, a distribution network formed by the Bank of Mexico and the Bank of National Savings and Financial Services S.N.C. (BANSEFI) that is assisting Mexican savings and credit unions to accept electronic payments.
“The challenge is that many remittance payments are destined for rural parts of Mexico that are underserved, where people may not have ATMs or a Western Union,” Dr. Schulz said.
Once the system is up and running, a person in Georgia who wants to make a transfer will need an account with a participating bank here, and the recipient will need an account with any commercial bank in Mexico. All commercial banks in Mexico are already set up in the network, and the number of credit union locations is increasing, he said.
“This is the cheapest way to send money to Mexico,” Dr. Schulz said. A transfer using the new system will cost participating U.S. banks 67 cents, a savings of 25 percent on the average cost of sending remittances to Mexico.
Other international transfer payment systems charge higher initial fees and higher foreign exchange fees, he said. The Fed program’s exchange fees are one-eighth to one-fifteenth the cost of typical market rates.
The project was started with staff at the Fed’s Atlanta branch in February 2004, and while it has been tested by a few Georgia banks, it has not yet been implemented. The Fed is continually improving the system, however, shortening the payment time from two days to one, distributing marketing materials in Spanish and developing relationships with institutions in Mexico, Dr. Schulz said.
“Georgia banks are interested and are evaluating it,” he said of the new system.
To participate in the teleconference on June 28 or to purchase a CD-ROM of the event, visit www.nacha.org/conferences/ or call (800) 487-9180. Contact Dr. Schulz at (404) 498-8792 or firstname.lastname@example.org for more information.