(1 August 2024 – United States) 140 rural community banks will be used to facilitate a new cross-border payments system between the US and Mexico.
The initiative, being developed by the Interledger Foundation and the People’s Clearinghouse, aims to address the high fees and long wait times associated with private money transfer services, which often leave local financial institutions and communities underserved.
The project will leverage the Interledger Protocol and Rafiki software to connect community banks and credit unions in Mexico with US-based senders, allowing direct deposits into clients’ accounts. This will boost local capital and investments.
Isabel Cruz, chairwoman, People’s Clearinghouse, says: “Our mission is to create a door to the world so community banks can access banks and authorize transfers no matter where payments originate.
“It’s critical that we work with organizations like the Interledger Foundation to achieve this considering that there is little incentive for U.S. financial institutions to invest in building infrastructure for rural banks. To Mexican communities and residents, on the other hand, there are huge social and financial benefits for introducing a payment gateway that’s instantaneous and affordable.”
The initiative will involve 140 members of the Mexican Association of Social Sector Credit Unions and aims to serve as a global model for improving payments in underserved regions.
Briana Marbury, CEO of the Interledger Foundation, highlights the project’s potential to democratise payments and reduce fees dominated by a few major companies; “We view the work that People’s Clearinghouse is spearheading in Mexico as a roadmap that other regions across the world can also follow to democratise payments in currently underserved communities.
“Cross-border remittances have historically been dominated by a few companies that charge high fees to capitalise on the needs of vulnerable populations. We are eager to change this, one country at a time.”
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