SPEI for everyone? Amucss presents a project to digitize remittances to the rural sector

The Mexican Association of Social Sector Credit Unions (Amucss), with the support of the Interledger Foundation, is in the process of creating a clearinghouse to help platforms in the popular savings and credit sector, especially focused on rural communitiesto connect to the Interbank Electronic Payment System (SPEI) of Banco de México.

Part of the objectives of this project, according to its promoters, is that the remittances that are sent from abroad to the country, arrive directly to the accounts of the beneficiaries, opened in popular savings and credit entities, such as community financial companies. (sofincos) or savings and loan cooperatives), in order to take advantage of these resources to provide them with savings schemes and offer them credit, among other services.

“With the help of a group of experts, we reached a dialogue with the central bank and managed to trace a possible route that directly links international transfers to savings accounts that exist in communities of origin, in cooperatives or sofincos,” said Isabel Cruz Hernández, president of the Amucss.

Cruz Hernández put into context the difficulty that people from rural communities have to collect remittances that their countrymen send them, especially from the United States, since they have to make long trips to establishments, whether financial or commercial, to receive their resources at the window of said places.

However, the president of Amucss indicated that this situation is beginning to be taken advantage of by large financial competitors, who attract these beneficiaries as clients so that the resources sent, digitally, reach accounts opened in them, and are not only collected over the counter, which can be replicated in popular savings and credit institutions established in rural regions, many of them with high migration to the United States.

“For example in Azteca Bank Many of the remittances are already arriving at that bank’s accounts and people are going to withdraw their money, no longer over the counter (direct payment), but from a bank account. We are already in the middle of a digital revolution, where many of the financial services will have an electronic means to access (remittances), particularly the cell phone,” said Cruz Hernández.

That is why the Amucss began talks with Banxico three years ago to find out what technological mechanisms the sofincos and socaps they support can implement, so that the remittances reach beneficiary accounts opened in these entities and, in turn, the companies capture part of the those resources and thus they can have liquidity to detonate the credit in said communities.

The central bank’s suggestion was the creation of a clearinghouse that connects directly to the I HOPEso that it can provide the service as a direct participant to the popular savings and credit entities (indirect participants) and thus, that the institutions that connect have the opportunity to receive the remittances for their dispersion in the communities where they serve.

“To do this, we had to create a company, which is a clearing house. This initiative is innovative and against the current, because it proposes consolidating a private social service, of social economy in communities of origin and it is challenging because it is proposed so that small institutions that operate in rural areas are able to enter national and international means of payment”, highlighted the president of Amucss.

Clearinghouses are systems in charge of providing clearing and settlement services for interbank documents, Electronic Funds Transfer operations and domiciliation of receipts.

Currently, Banxico has authorized MasterCard, Prosa, E-Global and Visa, as clearinghouses for card payments and Transfer for mobile device transfers. These organizations can act as participants in the SPEI network, which currently has more than 86 financial entities connected directly and some of them provide the service to other institutions indirectly.

During 2022, the value of income from remittances was 58,497 million dollars and 98.9% of the operations were carried out through electronic transfers.

popular system

In January 2022, Amucss was selected as one of the 12 organizations worldwide to receive resources from the Interledger Foundation, to expand financial inclusion and thus, to develop the clearinghouse project, called La Cámara de la Gente.

Andrés Arauz, an Ecuadorian consultant specializing in means of payment and who supports the creation of the project, indicated that the objective of La Cámara de la Gente is to create the technological infrastructure, so that popular savings and credit entities can support each other to connect points of shipment of remittances to their systems, in addition to offering other services such as connection with other banks, correspondents, aggregators, establishing ATMs or offering cards.

“This extra layer gives tremendous visibility to the popular savings and credit sector so that not only remittances or subsidies can be received, but, for example, the payroll of public sector workers can be offered, such as teachers in rural areas, and they can directly receive their deposit in the sofinco account, originated in Banxico’s SPEI.”, stated Arauz.

For Roberto Valdovinos, another consultant with experience in migration issues, popular savings and credit entities have barriers to developing digital payment mechanisms, for which La Cámara de la Gente will be a technological and innovative alternative within this ecosystem.

“We facilitate the process so that everything that emerges from innovation in the next two, five or 10 years, can be quickly implemented by popular savings and credit entities, instead of being left behind and that commercial banks are the only ones that implement it,” Valdovinos said.

Arauz highlighted that as the project has evolved, different regulatory barriers have been overcome, mainly due to the issuance of Banxico’s provisions at the beginning, as well as the National Baking and Stock Commission so that popular savings and credit entities can have savings accounts associated with telephone numbers.

Impact

Next April, it is expected that the project will be officially presented, already with an important advance in the question of the authorization of the clearing house by Banxico to be a direct participant to SPEI.

According to the president of Amucss, this project could have an initial impact on all entities in the popular savings and credit sector that provide care to the rural sector, benefiting up to 4 million people who are served by said institutions; however, the infrastructure is created so that other types of players can join.

“Belonging to a clearinghouse like this allows us to have an ecosystem and automatically all the members of that clearinghouse become points of interaction with the rest of the participants. We go throughout the entire sector of sofincos and rural socapsbut we are talking with the big socaps because the difficulty of accessing payment methods is not exclusive to small institutions, but also to large ones,” said Cruz Hernández.

Currently, the sector of the sofincos within the Amucss network is made up of 22 companies, which serve 190,000 members with 114 branches in 15 states and have 55,000 borrowers, with a credit portfolio of 775 million pesos and a savings balance. of 933 million pesos.

While the socaps sector is made up of 154 authorized entities, which manage assets for more than 229,580 million pesos serving 8.5 million members.