Following this announcement, the financial institutions are set to implement a new cross-border payment infrastructure, aiming to facilitate remittances between the US and Mexican residents via community banks in rural areas. The initial work is expected to provide streamlined cross-border transaction capabilities to the 140 community banks that belong to the Mexican Association of Social Sector Credit Unions (AMUCSS) — a network of community banks in rural regions in Mexico.
The new payment infrastructure aims to also serve as a project that can be deployed around the world in order to serve other under-banked and rural populations. In addition, both People’s Clearinghouse and the Interledger Foundation will continue to focus on meeting the needs, preferences, and demands of clients and customers in an ever-evolving market, while prioritising the process of remaining compliant with the regulatory requirements and laws of the industry as well.
At the moment, for US-based Mexicans, the process of using money transfer services to send money to recipients in the region of Mexico often comes with high fees, high minimums, as well as prolonged wait times. With this in mind, the Interledger Foundation and People’s Clearinghouse aim to arm rural community banks and financial institutions with the needed digital infrastructure and secure payment options to transfer remittance flows into the capital and to reinvest locally.
This will also include receiving remittances directly into their customers’ accounts, as well as generating deposits that will lead to substantially more loans and local investments. In order to achieve this, The People’s Clearinghouse is set to utilise the Interledger Foundation’s Interledger Protocol (ILP) – an open, neutral protocol for transferring money – and its Rafiki software to create internetwork connections. This process will enable everyday customers to bypass private money transfer solutions, as well as route transactions to local credit unions and community banks back at home.
Funded chiefly by the Interledger Foundation, the project builds on the organization’s ongoing work with Mojaloop, which focuses on supporting money movement on a regional and national level, as well as translating from the ILP language to what each community bank is currently leveraging. Singapore-based fintech company Thistaworks is also participating in the initiative, aiming to ensure that community banks and financial institutions have the core technical systems they need in order to transfer and convert these critical remittance flows in a secure and fast manner.
In addition, the companies anticipate that the new cross-border payments infrastructure will open Mexico up to a number of other applications focused on driving commerce, financial inclusion, and new opportunities.
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