# Presentation: 071710

## 
Southwest Regional Conference on Reaching Unbanked People
 Dec. 4, 2006

- Southwest Regional Conference on Reaching Unbanked People
-  Dec. 4, 2006

- The Directo a México logo and “Directo a México” are service marks of the Federal Reserve Banks in the United States and service marks of the Banco de México in Mexico

## Directo a México

- Account-to-Account Transfer
- Banco de México is “Receiving Gateway Operator”
- Uses existing ACH formats / NACHA rules
- CBR/PBR SEC codes
- Certainty of Payment
- Next business day funds availability (by 2:30 p.m. CT)
- Same day as U.S. settlement*
- Low cost
- Per item surcharge of $0.67 to U.S. financial institutions
- U.S. financial institutions determine their own fee to customers

- *Assuming not a bank holiday in Mexico.

## Financial institutions determine own usage and customer procedures
customer / non-customer usage
limit(s) on payment value
Directo a México Marketing Kit – complimentary availability to all users

- Financial institutions determine own usage and customer procedures
- customer / non-customer usage
- limit(s) on payment value
- Directo a México Marketing Kit – complimentary availability to all users

- Directo a México

## Direct, electronic access to all bank accounts at any of the Mexican commercial banks and other financial institutions
Banks: Banamex, Santander Serfin, BBVA Bancomer, Banjército, HSBC, Bajio, Ixe, Inbursa, Interacciones, Mifel, Scotiabank, Banregio, Invex, Bansi, Afirme, Banorte, AbnAMRO, Amex, Bamsa, BankBoston, Azteca, Bansefi, Ve por más, AUTOFIN, Barclays.
Brokerage firms: Monex, Masari, GBM, Value and Tiber.
15 additional FIs are in the implementation process. These include: insurance companies, mutual funds and brokerage houses.
Delivery to more than 41 million bank accounts in Mexico

- Direct, electronic access to all bank accounts at any of the Mexican commercial banks and other financial institutions
- Banks: Banamex, Santander Serfin, BBVA Bancomer, Banjército, HSBC, Bajio, Ixe, Inbursa, Interacciones, Mifel, Scotiabank, Banregio, Invex, Bansi, Afirme, Banorte, AbnAMRO, Amex, Bamsa, BankBoston, Azteca, Bansefi, Ve por más, AUTOFIN, Barclays.
- Brokerage firms: Monex, Masari, GBM, Value and Tiber.
- 15 additional FIs are in the implementation process. These include: insurance companies, mutual funds and brokerage houses.
- Delivery to more than 41 million bank accounts in Mexico

- Gateway to Mexican Payments System

## Remittance Fees are Decreasing

- The average cost for remittances has decreased more than 64% during last five years.
- It is now $10 for a $300 transfer.
- USODFI participants in Directo a México, generally charge $5 or less.

- More Pesos for Every Dollar Sent

- U.S. dollar to Mexican peso conversion at highly competitive rate for every payment—regardless of amount
- Rate to consumer is wholesale rate (FIX) less 0.21% spread
- _[http://minneapolisfed.org/fedachfx/index.cfm](http://minneapolisfed.org/fedachfx/index.cfm)_

## Foreign Exchange SavingsDirecto a Mexico FX rates compared to data in Appleseed study on FX rates of other transfers for 2 week period in 2005.

- Study available at: http://appleseeds.net/servlet/PublicationInfo?articleId=48

- “Banked Bonus” – Directo a México FX rate results in beneficiary receiving peso equivalent of US$5 more per transfer (on a US$350 payment)

## Web site developed by Bansefi to pre-open low-cost accounts in Mexico
Facilitate usage of the banked channel for US-to-Mexico remittances and to increase financial access in Mexico
Links originating remitter in US with receiving beneficiary in Mexico Directo a México payment channel
Bansefi & L@Red de la Gente

- Web site developed by Bansefi to pre-open low-cost accounts in Mexico
- Facilitate usage of the banked channel for US-to-Mexico remittances and to increase financial access in Mexico
- Links originating remitter in US with receiving beneficiary in Mexico Directo a México payment channel
- Bansefi & L@Red de la Gente

- Beneficiary Account Registration (BAR)

## Banco del Ahorro Nacional y Servicios Financieros (National Savings & Financial Services Bank)
Mexican government-owned development bank
Created in 2001 with a mandate to promote savings and affordable financial access in Mexico
Provides low cost financial services at own retail branch network (over 500 branches) across lower-income communities 
Encourages and coordinates the development of credit unions and savings institutions in Mexico

- Banco del Ahorro Nacional y Servicios Financieros (National Savings & Financial Services Bank)
- Mexican government-owned development bank
- Created in 2001 with a mandate to promote savings and affordable financial access in Mexico
- Provides low cost financial services at own retail branch network (over 500 branches) across lower-income communities
- Encourages and coordinates the development of credit unions and savings institutions in Mexico

- Bansefi

## Bansefi Branch Network

**over 500 branches**

## “The People’s Network” – a commercial alliance between Bansefi and regulated intermediaries in the microfinance sector (credit unions and savings institutions)
Provides financial services including delivery of government aid programs among lower-income sectors of the population
4th largest financial network in Mexico
Credit union membership in L@Red de la Gente is voluntary
Bansefi supports L@Red de la Gente credit unions in technical assistance, training, and financial development

- “The People’s Network” – a commercial alliance between Bansefi and regulated intermediaries in the microfinance sector (credit unions and savings institutions)
- Provides financial services including delivery of government aid programs among lower-income sectors of the population
- 4th largest financial network in Mexico
- Credit union membership in L@Red de la Gente is voluntary
- Bansefi supports L@Red de la Gente credit unions in technical assistance, training, and financial development

- L@Red de la Gente

## L@Red de la Gente Network

**More than 93 members with more than 1,200**
**branches**

## Account pre-opening at any Bansefi branch across Mexico*
CLABE for receiver generated on website
Web site produces a wallet card with information to provide to your customer
New account owner must visit branch with proper identification to formalize account opening

- Account pre-opening at any Bansefi branch across Mexico*
- CLABE for receiver generated on website
- Web site produces a wallet card with information to provide to your customer
- New account owner must visit branch with proper identification to formalize account opening

- BAR Features

- *BAR interface is being developed for Mexican credit unions to be able to generate CLABEs on the BAR. Credit unions will join the BAR individually.

## Beneficiary Account at Bansefi 
Cuenta Con Tu Gente (Account With Your People/ Count on your People)
No fees
$50 pesos (~US$ 5) minimum balance
Funds access at branch

- Beneficiary Account at Bansefi
*Cuenta Con Tu Gente* (Account With Your People/ Count on your People)
- No fees
- $50 pesos (~US$ 5) minimum balance
- Funds access at branch

- Cuenta Con Tu Gente

## The BAR is:
An internet tool for USFIs to pre-open a Bansefi account for a third-party beneficiary in Mexico
A secure internet portal which requires an individual ID and password
Operated and managed by Bansefi

The BAR is not:
An internet payments engine to send remittances to Mexico (Directo a México is the payment channel)
A tool to be accessed directly by customers. Only authorized USFIs may access the Web site

**The BAR *****is*****:**
- An internet tool for USFIs to pre-open a Bansefi account for a third-party beneficiary in Mexico
- A secure internet portal which requires an individual ID and password
- Operated and managed by Bansefi
**The BAR is *****not*****:**
- An internet payments engine to send remittances to Mexico (Directo a México is the payment channel)
- A tool to be accessed directly by customers. Only authorized USFIs may access the Web site

- BAR Summary

## New Account Holder in Mexico:
Is Bansefi’s customer – Not the customer of the USFI
Bansefi branch personnel responsible for account opening compliance
Customer identification per Bansefi/Mexican account opening procedures

USFI Responsible for:
Compliance around the “new account holder” as a receiver of a cross-border payment

**New Account Holder in Mexico:**
- Is Bansefi’s customer – Not the customer of the USFI
- Bansefi branch personnel responsible for account opening compliance
- Customer identification per Bansefi/Mexican account opening procedures
**USFI Responsible for:**
- Compliance around the “new account holder” as a receiver of a cross-border payment

- BAR – Compliance Aspects

## Receiver can access funds:
in own account
at a branch (8,757 branches nationally)
at an ATM (24,323 across Mexico)
via point of sale terminal (229,507 nationally) 

No beneficiary deductions or lifting fees in Mexico
U.S. originator pays all fees for transfer to reach destination
Mexican banks do not charge beneficiaries to receive these payments

- Receiver can access funds:
- in own account
- at a branch (8,757 branches nationally)
- at an ATM (24,323 across Mexico)
- via point of sale terminal (229,507 nationally)
- No beneficiary deductions or lifting fees in Mexico
- U.S. originator pays all fees for transfer to reach destination
- Mexican banks do not charge beneficiaries to receive these payments

- Ease of Receiving Funds in Mexico

## Mexican Electronic Interbank Payment System (SPEI)

- SPEI is the Mexican real-time gross settlement system supported, administered, and regulated by Banco de México, the Central Bank of Mexico.
- SPEI handles large and small value payments
- Complies with the more advanced international standards “Core Principles for Systemically Important Payment Systems (BIS, 2001)”.

## Directo a México through SPEI

- RDFI required to post the payment amount in the beneficiary’s account within 10 minutes following receipt.
- Since October 2003, Banco de México has processed more than 735,000 payments for an approximate value of $295 million.
- Return rate is 0.25%.

## CLABE (Clave Bancaria Estandarizada). 

- The Mexican banking system has established a unique 18 digit number to identify account holders. This unique number guarantees the correct posting of the funds transfers. It incorporates the standard account number with additional bank information. The structure is shown below.

## More Information

- Mexico Service Manual-formats and more
- _[http://www.frbservices.org/Retail/pdf/FedACHiMxManual.pdf](http://www.frbservices.org/Retail/pdf/FedACHiMxManual.pdf)_
- Updated daily & historical foreign exchange rates
- _[http://minneapolisfed.org/fedachfx/index.cfm](http://minneapolisfed.org/fedachfx/index.cfm)_

## Contact Info.

- directoamexico@atl.frb.org

## Migrant Concentration in the US

| State | Migrants in USA | Mexican origin |
| --- | --- | --- |
| California | 8,455,926 | 3,889,695 |
| Texas | 5,071,963 | 1,870,787 |
| Illinois | 1,144,390 | 609,068 |
| Arizona | 1,065,578 | 435,001 |
| Colorado | 450,760 | 192,427 |
| Florida | 363,925 | 189,819 |
| Nuevo México | 330,049 | 103,153 |
| Washington | 329,934 | 149,281 |
| Nevada | 285,764 | 142,685 |
| Georgia | 275,288 | 196,011 |
| New York | 260,889 | 170,386 |
| Carolina del Norte | 246,545 | 179,236 |
| Michigan | 220,769 | 62,289 |
| Oregon | 214,662 | 117,297 |
| Indiana | 153,042 | 61,336 |
| Kansas | 148,270 | 64,896 |
| Utah | 136,416 | 64,921 |

| State | Migrants in USA | Mexican origin |
| --- | --- | --- |
| Oklahoma | 132,813 | 58,145 |
| Wisconsin | 126,719 | 57,638 |
| New Jersey | 102,929 | 64,614 |
| Minnesota | 95,613 | 45,557 |
| Ohio | 90,663 | 23,216 |
| Idaho | 79,324 | 37,204 |
| Missouri | 77,887 | 30,573 |
| Tennessee | 77,372 | 51,174 |
| Virginia | 73,979 | 35,210 |
| Nebraska | 71,030 | 28,996 |
| Arkansas | 61,204 | 31,422 |
| Iowa | 61,154 | 199,987 |
| Pennsylvania | 55,178 | 24,306 |
| South Carolina | 52,871 | 30,524 |
| Alabama | 44,522 | 27,103 |
| Maryland | 39,900 | 19,797 |
| Louisiana | 32,267 | 7,394 |

## Migrants Concentration in US

| State | Migrants in USA | Mexican Origin |
| --- | --- | --- |
| Kentucky | 31,385 | 13,577 |
| Connecticut | 23,484 | 12,994 |
| Massachussets | 22,288 | - |
| Mississipi | 21,616 | 8,401 |
| Wyoming | 19,963 | 4,785 |
| Hawai | 19,280 | 1,293 |
| Alaska | 13,334 | 3,106 |
| Delaware | 12,986 | 8,053 |
| Montana | 11,735 | 506 |
| Dakota del Sur | 6,364 | 857 |
| Rhode Island | 5,881 | - |
| Dto. de Columbia | 5,098 | 2,177 |
| New Hampshire | 4,590 | - |
| West Virginia | 4,347 | 1,204 |
| Dakota del Norte | 4,295 | 304 |
| Maine | 2,756 | - |
| Vermont | 1,174 | - |
| Total | 20,640,171 | 9,328,405 |

- Sources:  US Census Office,  CONAPO Mexican National Population Council, CIS Center for Immigration Studies (CIS), Mexican Consulates in Piladelphia, Detroit, Michigan and Ohio
- Banco de México and CNBV

## Mexican Migrants’ Origin, Remittances and Banking Infrastructure

| State | Migrants to USA
(Last 5 years) | Remittances (USD millions and %) 
2005 | Population | Directo a México Payments in 2005  | Bank
Branches | Savings and checking accounts | ATMs |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Guanajuato | 366,123 | 1,715 (8.6) | 4,663,032 | 25,420 | 351 | 1,346,378 | 881 |
| Jalisco | 291,657 | 1,693 (8.5) | 6,322,002 | 86,195 | 685 | 2,503,499 | 1,647 |
| Michoacán | 248,040 | 2,595 (13) | 3,985,667 | 42,734 | 278 | 1,071,404 | 498 |
| San Luis Potosí | 135,383 | 476 (2.4) | 2,299,360 | 5,738 | 135 | 637,735 | 398 |
| Zacatecas | 116,351 | 496(2.5) | 1,353,610 | 13,775 | 88 | 362,994 | 171 |
| Estado de México | 111,837 | 1675(8.4) | 13,096,686 | 2,637 | 724 | 3,294,016 | 1,690 |
| Oaxaca | 109,693 | 1,002(5) | 3,438,765 | 1,682 | 145 | 697,264 | 280 |
| Puebla | 97,604 | 1,174(5.9) | 5,076,686 | 1,836 | 286 | 1,189,354 | 687 |
| Hidalgo | 91,007 | 718(3.6) | 2,235,591 | 1,051 | 109 | 583,175 | 299 |
| Veracruz | 85,196 | 1,155(5.8) | 6,908,975 | 2,499 | 383 | 1,780,702 | 1,081 |
| Durango | 79,781 | 342(1.7) | 1,448,661 | 7,809 | 83 | 329,872 | 200 |

- Sources:  US Census Office,  CONAPO Mexican National Population Council, CIS Center for Immigration Studies (CIS), Mexican Consulates in Piladelphia, Detroit, Michigan and Ohio
- Banco de México and CNBV

## Mexican Migrants’ Origin, Remittances and Banking Infrastructure

| State | Migrants to USA
(Last 5 years) | Remittances (USD millions and %) 
2005 | Population | Directo a México Payments in 2005  | Bank Branches | Savings and checking accounts | Number of ATMs |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Chihuahua | 76,864 | 293(1.5) | 3,052,907 | 7,235 | 283 | 1,216,018 | 976 |
| Sinaloa | 65,148 | 371(1.8) | 2,536,844 | 1,750 | 232 | 967,614 | 524 |
| Guerrero | 58,539 | 957(4.8) | 3,079,649 | 2,650 | 157 | 778,307 | 317 |
| Sonora | 56,439 | 186(0.9) | 2,216,969 | 1,427 | 238 | 902,542 | 595 |
| Distrito Federal | 50,982 | 1,452(7.2) | 8,605,239 | 17,311 | 1,381 | 6,349,516 | 4,727 |
| Tamaulipas | 50,905 | 302 (1.5) | 2,753,222 | 3,814 | 279 | 1,202,229 | 998 |
| Morelos | 47,408 | 476 (2.4) | 1,555,296 | 2,577 | 127 | 593,045 | 328 |
| Nuevo León | 46,701 | 231(1.2) | 3,834,141 | 14,362 | 571 | 2,128,090 | 1,932 |
| Baja California | 45,188 | 187(0.9) | 2,487,367 | 3,072 | 266 | 1,281,846 | 951 |
| Chiapas | 43,741 | 655(3.3) | 3,920,892 | 300 | 153 | 659,058 | 320 |
| Nayarit | 38,828 | 280(1.4) | 920,185 | 2,038 | 57 | 211,216 | 126 |

- Sources:  US Census Office,  CONAPO Mexican National Population Council, CIS Center for Immigration Studies (CIS), Mexican Consulates in Piladelphia, Detroit, Michigan and Ohio
- Banco de México and CNBV

## Mexican Migrants’ Origin, Remittances and Banking Infrastructure

| State | Migrants to USA
(Last 5 years) | Remittances (USD millions and  %) 
2005 | Population | Directo a México Payments in 2005  | Bank Branches | Savings and checking accounts
 | Number of ATMs |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Querétaro | 38,391 | 392(2) | 1,404,306 | 1,387 | 108 | 440,129 | 463 |
| Aguascalientes | 36,036 | 317(1.6) | 944,285 | 7,114 | 73 | 391,146 | 276 |
| Coahuila | 35,108 | 189(0.9) | 2,298,070 | 4,527 | 237 | 1,006,319 | 809 |
| Tlaxcala | 15,067 | 210(1.0) | 962,646 | 111 | 48 | 235,675 | 129 |
| Colima | 12,182 | 145(0.7) | 542,627 | 2,762 | 58 | 205,887 | 200 |
| Campeche | 4,864 | 49 (0.2) | 690,689 | 72 | 52 | 263,617 | 142 |
| Baja California Sur | 1,312 | 21(0.1) | 424,041 | 258 | 58 | 247,728 | 162 |
| Tabasco | 17,901 | 126(0.6) | 1,891,829 | 170 | 121 | 476,372 | 348 |
| Yucatán |  | 80(0.4) | 1,658,210 | 3,315 | 129 | 413,988 | 314 |
| Quintana Roo |  | 73(0.4) | 874,963 | 371 | 91 | 465,719 | 431 |
| Total | 2,474,276 | 20,033 | 93,058,410 | 264,143 | 7,645 | 32,876,375 | 21,807 |

- Sources:  US Census Office,  CONAPO Mexican National Population Council, CIS Center for Immigration Studies (CIS), Mexican Consulates in Piladelphia, Detroit, Michigan and Ohio
- Banco de México and CNBV