MADISON, Wis. (2/19/04)--The lack of access to financial service in Mexico and developing countries may be a hindrance to the Federal Reserve's new "gateway" service, which lets banks and credit unions use the automated clearing house (ACH) to send money to Mexican financial institutions.
The Fed introduced the service Tuesday after piloting the project for a year.
However, unlike Western Union wire service run by First Data Corp. or World Council's international remittance program, IRnet, the Fed's program requires that both sender and recipient have a bank account.
According to Dave Grace, senior manager, international trade association at WOCCU, "The requirement of having a 'bank' is absolutely a hindrance, as 65% to 85% of Mexicans in Mexico are unbanked." He said he'll address the issue of the lack of access in a presentation to the World Bank staff later this week.
WOCCU and CUNA have been working with the Fed "for some time. WOCCU/CUNA helped move this along via our Senate banking committee testimony in February 2001 and discussions with Senate staff," says Grace.
"We also provided Fed staff names and contacts of credit unions as potential users of the service," says Grace.
"One of my biggest concerns with the system, however, is that Mexican credit unions do not have direct access to this payment system in Mexico. In the U.S., it's unimaginable that U.S. credit unions should have access to central bank clearing and settlement systems."
However, "we continue to work with the Fed and Banco de Mexico on this issue," says Grace.
According to American Banker (Feb. 18), the Mexican and Canadian services are one-way channels of funds flowing out of the U.S. The Fed had planned two-way flows in service to five European countries, but last fall the Treasury Department's Office of Foreign Assets Control and NACHA, the electronic payments association, raised concerns about screening controls.
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.