A new cross-border payments infrastructure will facilitate remittances between the US and Mexico through 140 community banks located in rural areas.
This initiative is being spearheaded by the Interledger Foundation, an organization focused on establishing an open, interoperable payment network, in collaboration with the People’s Clearinghouse, which partners with community banks and credit unions in Mexico.
The Interledger Foundation highlights that many US-based Mexicans who rely on private money transfer services encounter high fees, steep minimums, and lengthy wait times. These services also fail to empower local financial institutions or the communities they serve, fostering cash-based environments where capital does not enter community banks’ ledgers. Consequently, communities miss opportunities for innovation and sustainable development due to a lack of accessible capital.
The goal of the Interledger Foundation and People’s Clearinghouse is to equip rural community banks with the necessary digital infrastructure and secure payment capabilities to transform remittance flows into locally reinvested capital. This initiative will enable remittances to be deposited directly into clients’ accounts, which will subsequently increase deposits and lead to more loans and local investments.
To achieve this, The People’s Clearinghouse will utilize the Foundation’s Interledger Protocol—an open, neutral protocol for transferring money—and its Rafiki software to establish internetwork connections. This will allow everyday users to bypass private money transfer services in favor of routing payments directly to local credit unions and community banks back home.
Isabel Cruz, chairwoman of the People’s Clearinghouse, states: “Our mission is to create a door to the world so community banks can access banks and authorize transfers regardless of where the payments originate. It’s critical that we collaborate with organizations like the Interledger Foundation to accomplish this, especially given the limited incentive for U.S. financial institutions to invest in infrastructure for rural banks. For Mexican communities and residents, the introduction of a payment gateway that is instantaneous and affordable offers significant social and financial benefits.”
The project will engage the 140 members of the Mexican Association of Social Sector Credit Unions, which comprises a network of community banks in rural Mexico.
Furthermore, the Interledger Foundation, which is primarily funding the initiative, envisions the new payment infrastructure as a model that can be replicated globally for other under-banked and rural populations.
Briana Marbury, CEO of the Interledger Foundation, expresses: “We see the work that People’s Clearinghouse is leading in Mexico as a roadmap that other regions around the world can follow to democratize payments in underserved communities. Historically, cross-border remittances have been dominated by a handful of companies that charge excessive fees to take advantage of vulnerable populations. We are eager to change this, one country at a time.”