In anticipation of the upcoming implementation of NACHA's International ACH Transaction (IAT) rule, the Federal Reserve Banks are introducing FedGlobal ACH Services, an enhanced suite of services designed to offer an efficient means for cross-border electronic payments to more than 30 countries in Europe and Latin America.
The Federal Reserve has provided outbound cross-border ACH payments to Canada, Mexico, and several European countries. It says the new portfolio of services represents a significant increase in the number of countries and payment options. "The FedGlobal name is being introduced to reinforce that the Federal Reserve's cross-border ACH services are substantially enhanced from the previous generation," said Elizabeth McQuerry, an assistant VP at the Federal Reserve Banks' Retail Payments Office, in a statement.
The initial country expansion will include Panama and 22 European countries, including all of the major economies in the Single Euro Payment Area (SEPA). Future growth into Latin America and other key geographic areas such as Asia is also planned for FedGlobal Services.
Foreign exchange options are also being expanded to enable the originating depository financial institution to manage its own foreign exchange rate for payments denominated in the British pound, Euro and Mexican peso. U.S. dollars converted to a variable amount of destination currency at a competitive foreign exchange rate will continue to be available for all destination countries.
Later in the year, the Federal Reserve will introduce a new payment option allow the transfer of funds from accounts at U.S. depository financial institutions to unbanked receivers at bank locations or at trusted, third-party providers. The Fed says this new option will help expand individual (receiver) access to cross-border ACH services in select countries to enable further growth in cross-border payments.
"The IAT contains all of the Travel Rule information, making it possible for financial institutions to efficiently offer this type of cross-border ACH transfer using the same robust compliance measures applied to account-to-account transfers," McQuerry stated. "We will soon be releasing the country reach and details for this new payment option. Initially, this product will be offered to Latin American countries."