The Interledger Foundation, an organization building and advocating for an open, interoperable payment network, today announced its work with the People’s Clearinghouse, a social sector tech platform that services community banks and credit unions in Mexico. Together, they will implement new cross-border payment infrastructure to facilitate remittances between U.S. and Mexican residents via community banks in rural areas. Their initial work will provide streamlined cross-border payment capabilities to the 140 community banks that belong to the Mexican Association of Social Sector Credit Unions (AMUCSS)—a network of community banks in rural Mexico. The new payment infrastructure will ultimately serve as a blueprint that can be deployed worldwide to serve other under-banked and rural populations.
For U.S.-based Mexicans, using private money transfer services to send money to recipients in Mexico often comes with high fees, high minimums, and prolonged wait times. It also does little to empower local financial institutions or the communities they serve. Still, these services remain the most accessible option for sending money to regions where community banks don’t have the clearing and transfer system necessary to directly deposit remittances into recipients’ accounts. This creates cash-based ecosystems where capital never enters community banks’ ledgers. As a result, communities miss out on capital that could otherwise fuel innovation and sustainable development––important drivers for retaining residents and fueling local initiatives.
The Interledger Foundation and People’s Clearinghouse aim to arm rural community banks with the digital infrastructure and secure payment capabilities they need to transform remittance flows into capital to reinvest locally. This will include receiving remittances directly into their clients’ accounts and generating deposits that will lead to substantially more loans and local investments. To achieve this, The People’s Clearinghouse will utilize the Interledger Foundation’s Interledger Protocol (ILP)–an open, neutral protocol for transferring money–and its Rafiki software to create internetwork connections. All of this will enable everyday users to bypass private money transfer services and route payments to local credit unions and community banks back home.
Funded chiefly by the Interledger Foundation, the project builds on the organization’s ongoing work with Mojaloop. Backed by the Bill and Melinda Gates Foundation, Mojaloop’s instant payments infrastructure will support money movement on a regional and national level, as well as translate from the ILP language to what each community bank is currently using. Thistaworks, a Singapore-based fintech company, is also participating in the initiative to ensure that community banks have the core technical systems they need to seamlessly transfer and convert these critical remittance flows.
“Our mission is to create a door to the world so community banks can access banks and authorize transfers no matter where payments originate,” notes Isabel Cruz, CEO of AMUCCS and Chairwoman of the People’s Clearinghouse. “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 Interledger Foundation and People’s Clearinghouse anticipate that the new cross-border payments infrastructure will ultimately open Mexico up to a number of other unforeseen applications that will drive commerce and opportunities.
“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 democratize payments in currently underserved communities,” said Briana Marbury, CEO of the Interledger Foundation. “Cross-border remittances have historically been dominated by a few companies that charge high fees to capitalize on the needs of vulnerable populations. We are eager to change this, one country at a time.”
The Interledger Foundation seeks to broaden access to financial capabilities for millions of users across the globe through an open, interoperable payment network that doesn’t limit transactions to particular banks, mobile money providers or locations. The organization currently has active initiatives around the world, including in the United States, Jordan, South Africa, Singapore and Amsterdam. Fintech companies interested in building infrastructure in support of its global interoperability network are encouraged to submit proposals here. Selected projects will receive up to $250,000 in funding toward integrating interoperability into existing financial and payment infrastructures.