The Federal Reserve Bank, in cooperation with Banco de México, Mexico's central bank, will reduce the ACH processing time for cross-border transactions to a single day.
"Effective in July, what were previously two-day payments into Mexico will now be one-day payments," says Richard Oliver, executive vice president, Federal Reserve Bank of Atlanta, and retail payments product manager for the Federal Reserve System. "It creates, in essence, a pan-North American payments mechanism that's operating on domestic schedules."
The FedACH International Mexico Service, launched in February 2004, allows U.S. originators to send a payment to any bank account in Mexico. Currently, the service has a volume of 23,000 payments per month, largely used for Social Security payments plus a smattering of commercial payments, according to Oliver.
The new program will help "small financial institutions in the heartlands that are working with various companies that have vendor relationships in Mexico," notes Oliver. "For smaller-dollar payments, it creates a business case that's much more sensible."