Thursday, September 7, 2006

Two Tennessee banks adopt Federal Reserve's Directo a Mexico program

The Tennessean reports in this article that two Tennessee banks have adopted a Federal Reserve Bank program called "Directo a Mexico," which is designed to help banking customers in the U.S. transfer money internationally without being overcharged:

"Every other month, Mercedes Suarez sends $500 to $1,000 to her brother in Mexico by paying a fee of $15 to $30 to the Western Union agent next door to her Nolensville Road dry-cleaning business."

"The Bank of America branch a mile away charges customers a flat fee of $8 to send the same amounts of money."

"Suarez's preference reflects the challenge U.S. banks face in capturing a larger share of the remittance business, which for Mexico involves people working in the United States sending $20 billion a year back home."

"For some undocumented immigrants with knowledge about banking, there's a perception that any dealings with banks may result in an even better paper trail for immigration authorities."

"But the U.S. government through the Federal Reserve Bank is seeking to reduce costs of immigrants sending money home."

"Last month, at a workshop in Nashville, the Federal Reserve Bank of Atlanta pitched bankers on a program called Directo a Mexico that has been picked up by two Tennessee banks."

"Kingsport-based Bank of Tennessee charges a $6 fee; Bank of Bartlett near Memphis in a test is charging from $5 to $11."

"Under the arrangement between the Fed and a Mexican bank, immigrants can help relatives in Mexico get a bank account to which money can be sent through the automated clearinghouse network for pickup by the next business day."

Focus: Business

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