Financial Update (Third Quarter 2003)


   International ACH

   FedImage Services

   Guynn’s Speech


   Bank Fees and

   Challenge of Low
   Interest Rates

   Emotion and
   Financial Markets


   Spanish Brochures

   Economic Forecasts


   Did You Know?

   Data Bank

   Circular Letters




Fed Network Extends ACH Services Internationally

Map of the Americas

In early 2001 the Federal Reserve’s automated clearinghouse network crossed the U.S. border, and international ACH service — between the United States and Canada — became available. Now, the Fed plans to extend the network again, offering service to Mexico and five countries in Europe: Germany, the United Kingdom, the Netherlands, Austria and Switzerland.

Service to these six countries via the Federal Reserve’s international ACH project, known as FedACH InternationalSM, is scheduled to launch in a limited capacity in November and should be in full production in a year. The Minneapolis Fed will serve as the sending and receiving gateway for international traffic, similar to its role with domestic transactions.

New opportunities for banks
The international initiative is part of the Fed’s ongoing effort to foster improvements in the payment system. According to Elizabeth McQuerry, an assistant vice president with the Atlanta Fed’s retail payments office, the current marketplace in international transfers is still developing and offers few options for the majority of banks. Pricing of these options is inconsistent, and the high costs of establishing partnerships with banks abroad can mean that small and medium-sized banks aren’t able to offer international payment services.

Elizabeth McQuerry

Larry Schulz

FedACH International will provide easy-to-establish and inexpensive options for banks of all sizes, allowing them to create an instant international department for their customers. Atlanta Fed Vice President Larry Shulz explains that, “Using the same formatting they have in place for domestic ACH — even using the same file for their domestic and international items — will allow banks to send payments to Canada, Europe and Mexico conveniently, with certainty of payment, and with no-hassle, low-cost foreign exchange.”

The Federal Reserve has established an infrastructure allowing banks to send payments to some of the most important economies in the world, according to McQuerry. “FedACH is now putting within our customers’ reach electronic access to countries representing 51 percent of global gross domestic product,” she says.

Fast and cheap
The low per-item charges and quick transaction times for international ACH payments may provide opportunities for savings and convenience that can be passed on to consumers. Fees charged to banks are well below the cost of a wire transfer, and ACH payments are more timely than international checks.

McQuerry reports a great deal of interest from banks wanting to be part of the pilot project. The Federal Reserve plans to expand coverage to additional regions, countries and even continents in the coming years.

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