Directo a México^® Frequently Asked Questions

The Directo a México marketing program was introduced to help U.S. financial institutions create awareness for and facilitate use of the Automated Clearing House (ACH) channel to remit funds to Mexico. Specifically, its goal is to encourage use of the Federal Reserve Banks’ FedGlobal Mexico Service.

Directo a México helps U.S. financial institutions capture a larger part of the rapidly growing U.S. to Mexico remittance market. The program also supports customers by providing a secure, fast, low-cost and convenient money transfer product for financial institutions to offer to their customers. The service that supports Directo a México, FedGlobal Mexico Service, is priced so that U.S. financial institutions can offer it at extremely competitive rates. The service is offered to financial institutions for a low per-item surcharge.

The wholesale foreign exchange rate applied to every payment — regardless of amount — means that the receiver gets more pesos for every dollar sent. Additionally, the funds are available in the receiving account in Mexico on the next banking day.

The FedGlobal Mexico Service is offered as part of the Federal Reserve Banks’ suite of FedACH^® Services. Financial institutions in the U.S. originate cross-border transactions via FedACH in U.S. dollars. Payments are transferred from FedACH to the Banco de México, the Mexican gateway operator, where they are distributed via the local payments system. Payments are posted to the receiver’s account in pesos on the next banking day — with every payment receiving a wholesale foreign exchange rate regardless of amount.

ACH stands for Automated Clearing House. The ACH network is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system governed by (Nacha) ACH Operating Rules and Guidelines, which provide for the interbank clearing of electronic payments for participating depository financial institutions. The Federal Reserve Banks are the nation’s largest ACH operator and provide central clearing facilities through which financial institutions transmit or receive ACH entries. ACH payments include:

• Cross-border payments (both commercial and person-to-person remittances)

• Direct deposit of payroll, Social Security and other government benefits, and tax refunds

• Direct payment of consumer bills such as mortgages, loans, utility bills and insurance premiums

• Business-to-business payments

• E-checks

• E-commerce payments

• Federal, state and local tax payments

ACH is an extremely, low-cost payments channel and is already in place in almost every financial institution in the U.S. Thus, there are no set-up costs for most financial institutions that choose to offer the program. ACH also uses standardized formats, which make it possible for the payments to be channeled to Mexico in an automated fashion and delivered electronically to bank accounts there. The efficiencies of ACH make it possible to offer this service to financial institutions at a low, per-item surcharge.

Money transfers, or remittances, are person-to-person payments generally to family members living in an individual’s country of origin. Remittances are a large and growing global phenomenon. However, several important characteristics of the U.S. to Mexico remittance market make it an attractive business consideration for financial institutions. The amount of funds transferred into Mexico is the second largest in the world — only India receives more remittance funds. It is notable that almost all remittances to Mexico originate in one country — the U.S. — and are growing at a very fast annual rate.

To learn more about Directo a México and the Federal Reserve Banks’ FedGlobal Mexico Service Offerings, contact your relationship manager.