ORLANDO — With the world's payment systems becoming more tightly linked, the Federal Reserve Board is expanding its international automated clearing house capabilities.

Several services the central bank unveiled Monday demonstrate how the ACH network, long one of the most important domestic payment systems, is becoming more useful for transactions that start or finish abroad.

Jim McKee, a senior vice president in the Fed's Retail Payments Office, said that electronic payments and globalization are closely linked elements of the evolving international economy, and that the new offerings will facilitate a variety of services that will let the U.S. banking system evolve.

The Fed is planning to let U.S. financial companies send ACH payments to nonbanks in other countries, he said — doing so could boost use of emerging remittance services. The central bank also said it will permit incoming ACH transactions from foreign banks, and it announced partnerships with service providers in Europe and Panama to encourage financial companies to make use of the new offerings.

In addition, the Fed plans to offer a suite of services that would help banks manage money in other countries.

McKee discussed the new Fed-Global ACH Services during a briefing Monday at the Nacha Payments Conference here.

ACH payments typically flow from one bank account to another, he said, but "we are expanding account-to-receiver services, so it can be received by a nonbank participant."

Sending ACH payments to nonbank receivers abroad could be especially useful for remittances, McKee said.

The new offerings are a recognition by the Fed of an important change in international payments: Many recipients, especially in developing nations, lack bank accounts but have other kinds of accounts, including mobile phone accounts.

Western Union Co. is testing in Great Britain Safaricom Ltd.'s M-Pesa mobile payment service, which lets people send remittances to the mobile phone accounts of people in Kenya.

Though McKee would not name any of the nonbanks to which the Fed would be willing to send money, he said it would vet any recipient networks "to manage the risk, so the payment is controlled and gets to the right people."

Elizabeth McQuerry, an assistant vice president in the Retail Payments Office, said the Fed has developed several foreign exchange procedures that would enable foreign banks in the United States to move money between accounts without converting currencies.

"Institutions can use their own euros, pesos or pounds," McQuerry said. "They will be able to completely manage their own foreign exchange."

This is an important change to the ACH network, she said. "The U.S. ACH settles only in U.S. dollars. We had to create a process to allow this to happen."

The services are being rolled out in conjunction with the introduction of the IAT (for "international ACH transaction") format, which takes effect Sept. 18.

The format is compatible with the specification for cross-border transactions in the Single Euro Payments Area. It includes the payment's originator, recipient and other details that will let U.S. banks perform the checks required by the Office of Foreign Asset Control to receive ACH transactions from abroad, McKee said.

"Today we have payments that only flow one way," he said. "We will be able to flow payments both ways."

The Fed said it has established strategic partnerships with the bank-owned Dutch cooperative Equens SE (to send and receive payments to Europe) and ACH Directo, the electronic payment unit of the bank-owned Panamanian cooperative Telered SA. Both connections are scheduled to go live in the fourth quarter.

Nick Holland, a senior analyst at Aite Group LLC of Boston, said that if the Fed "can come up with a robust, user-friendly, reliable system, then why wouldn't people go with it, particularly if it can be cheaper" than current international payment options.

However, he also said there are some issues with the ACH network that could be compounded by opening it up to new users.

Accepting more international payments "doesn't get away from some of the issues that are fundamentally hitting ACH," he said.

The system was "not designed for the types and volume of transactions that it's being used for," he said. It is "being pushed beyond what it was designed to do."

Michael Steinbach, Equens' chairman, said it is the No. 2 network for payments within Sepa, though most transactions in Europe are domestic rather than cross-border. "The partnership with the Fed is of utmost importance," he said. "This will increase our competitiveness in Europe."

Orlando A. Garcia, the chief executive of ACH Directo, said 6,000 people in Panama receive ACH payments each month from the U.S. government.

ACH Directo sees potential for commercial ACH payments and for groups such as Panamanian students attending U.S. colleges.

McQuerry said the Fed plans to seek similar partnerships in other parts of the world. "We're looking to Asia, because our companies and banks have asked us for that."

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