To: Specialized Reporting Conference

1

• To Specialized Reporting Conference
• Atlanta, GA
• November 16, 2005
• Larry J. Schulz
• Vice, President Federal Reserve Bank of Atlanta

Directo a México is a service mark (SM) of the
Banco de México and the Federal Reserve Banks.
2
2005

• Rebranding of FedACH InternationalSM Mexico
  Service
• White-branded funds transfer product for
  financial institutions using ACH formats
• Joint promotional campaign by Banco de México,
  Embassy and Consulates of Mexico, and the Federal
  Reserve Banks
• Enhanced product, greater value

3
Overview

• Enhanced Product
• Next business day funds availability
• Directo a México promotional kit
• Access to internet tool to facilitate
  registration of new accounts to receive
  remittances
• Greater Value
• Wholesale exchange rate spread (0.21) applied to
  all transfers regardless of amount
• Per item surcharge remains 0.67 to U.S. banks

Pilot program in Fall 2005.
4
Value to Banks

• Direct, electronic access to all bank accounts in
  Mexico
• Distribution network to be expanded when L_at_Red de
  la Gente credit union accounts are added
• U.S. originator pays all fees for transfer to
  reach its destination in Mexico
• Mexican banks do not charge beneficiaries to
  receive payments

5
Value to Banks continued

• Utilizes standard NACHA formats and ACH process
• Certainty of payment
• Cross-border payments in same file as domestic
  ACH
• U.S. financial institutions
• implement own customer fees
• determine own procedures and customer usage of
  Directo a México

6
Payment Flow

• Monday Customer requests U.S. bank to send
  funds to Tio Albertos account at Banco ABC in
  Mexico
• Later Monday U.S. bank sends payment to Fed no
  later than 215 a.m. ET on Tuesday
• Tuesday Morning Fed processes file sends to
  Banco de México for further processing foreign
  exchange conversion
• Tuesday 1430 p.m. CT Funds available in Tio
  Albertos account at Banco ABC

7
Foreign Exchange (FX)

• Conversion at wholesale rates (0.21 spread on
  daily Fix rate) for every paymentregardless of
  amount

8
Opportunities for Banks

• Creating new products
• Attracting new customer base
• Mexican originator as potential users of other
  financial service (cards, personal credits)
• CRA consideration
• Marketing tools
• Directo a México promotional materials
• Profeco listing of money transfer options

9
Directo a México Kit Contents

• Spanish language oriented toward consumer needs
• Color poster
• Color brochure
• Lobby cards
• Text of radio spot
• Customer Guide
• FX Information Sheet

10
Images in Promotional Campaign
11
Profeco Marketing Opportunity

• Financial institutions can promote their transfer
  products on Profeco website
• Directo a México is one of the most competitive
  services according to Profecos comparison Quién
  es quien en el envío de remesas
• Most competitive FX rate
• More pesos received by beneficiary
• The lowest total cost for the originator in the
  USA
• Information can be consulted at
• http//www.profeco.gob.mx/html/envio/envio.htm

Website to be update from Servicio Internacional
FedACH México To Directo a México name.
12
OFAC

• Originating financial institution has OFAC
  compliance requirement for the payment
• For outgoing payments, Know Your Customer (KYC)
  principles should be applied to sender and
  recipient by originating financial institution
  and its customer
• Fed will screen payments coming into US when new
  cross-border format is implemented and provide
  results in new OFAC Screening Indicator field

13
Beneficiary Account Registration

• Bansefi and L_at_Red de la Gente credit unions to
  provide internet utility to facilitate accounts
  for receivers of remittances
• CLABE for receiver to be generated on website
• Account owner/receiver must visit caja (credit
  union) with proper identification to finalize
  account opening
• Transferred funds will be available at caja for
  account owner/receiver
• Account owner/receiver now has a bank account and
  can begin using bank services
• Pilot program beginning September 2005

14
Resources

• Guide to a Successful FedACH InternationalSM
  Launch (1 page)
• http//www.frbservices.org/Retail/pdf/FedACH-IntGu
  ideSuccessLaunch.pdf
• Tools for Financial Institutions
• Info on foreign banking requirements in service
  manuals
• http//www.frbservices.org/Retail/intfedach.html
• Updated daily historical foreign exchange rates
• http//minneapolisfed.org/fedachfx/index.cfm

15
Contacts

• Larry Schulz
• Vice President
• Retail Payments Office
• Federal Reserve
• 404/498-8792
• larry.schulz_at_atl.frb.org

• Elizabeth McQuerry
• Assistant Vice President
• Retail Payments Office
• Federal Reserve
• 404/498-7888
• elizabeth.mcquerry_at_atl.frb.org