Report to the Congress on the Use of the ACH System and Other Payment Mechanisms for Remittance Transfers to Foreign Countries
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As of December 2014, of institutions completing the Call Report, 3,660 institutions reported offering remittance services to consumers.25 Of those institutions, 479, or 13.1 percent, provide the option to perform remittances via ACH transfers, which use the IAT format.26 Commercial IAT volume grew 28.9 percent from 2012, when the Board completed its previous report, to 2014, while overall ACH volume grew 8.9 percent.27 Through FedGlobal, the Reserve Banks processed 0.2 percent of the total commercial IAT volume handled by the ACH operators in 2014.28
As shown in table 1 below, between 2012 and 2014, FedGlobal commercial IAT volume fell by 25.5 percent. This decline was largely due to a high number of low-value class-action settlement payments delivered to Europe that inflated 2012 transaction volume. When compared to 2013, a year without a high volume of these types of payments, FedGlobal commercial IAT volume grew at a modest 5.2 percent in 2014. From 2012 to 2014, FedGlobal commercial IAT value increased 46.4 percent.29 FedGlobal service to Canada currently represents 62.3 percent of FedGlobal volume, with 70,159 IAT transactions valued at $1.5 billion in 2014.30
| 2010 | 2011 | 2012 | 2013 | 2014 | 2014 median value | |
|---|---|---|---|---|---|---|
| Total IAT volume | ||||||
| Commercial credits | 2,885,490 | 3,367,318 | 3,660,149 | 3,979,201 | 4,820,058 | _ |
| Commercial debits | 2,104,728 | 24,722,512 | 38,700,280 | 40,601,616 | 49,797,558 | _ |
| Total | 4,990,218 | 28,089,830 | 42,360,429 | 44,580,817 | 54,617,616 | _ |
| FedGlobal IAT volume | ||||||
| Commercial credits | 40,275 | 74,816 | 139,693 | 87,880 | 92,703 | $2,000 |
| Commercial debits | 3,690 | 7,670 | 11,551 | 19,202 | 19,961 | $140 |
| Total | 43,965 | 82,486 | 151,244 | 107,082 | 112,664 |
Note: Sources for the IAT volume data are the two ACH operators, FedACH and EPN. Median value was not available for all IAT payments. The data include "inbound" and "outbound" IAT payments. FedGlobal IAT volume reflects the subset of IAT payments that the Reserve Banks handle as gateway operator.
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25. In addition, insured credit unions report the number of international remittances originated year-to-date but do not collect information on the type of service used. These data are collected through the National Credit Union Administration (NCUA). Return to text
26. As of June 30, 2014, of the 4,359 depository institutions offering remittance transfer services to consumers, 557, or 12.8 percent, offered consumers the option to complete remittance transfers via ACH transfers, which use the IAT format. The IAT format, a standard entry classification adopted in 2009, does not distinguish among consumer, business, or government transactions. The IAT format replaced two prior formats--consumer cross-border payment and corporate cross-border payment originally established in 1999--that were determined to be inadequate for regulatory compliance purposes. The IAT format allows depository institutions and ACH operators to identify IAT payments. Return to text
27. "Commercial" refers to payments initiated by a business or a consumer but not by the U.S. government. The portion of IATs that are "remittance transfers" as defined by section 1073(a) of the Dodd-Frank Act is not determinable from the available data. Return to text
28. In 2014, the two U.S. ACH operators processed 18.3 billion total ACH transactions, of which 54.6 million (0.3 percent) were commercial IATs. In 2012, the two U.S. ACH operators processed 16.8 billion total ACH transactions, of which 42.4 million were commercial IATs. Return to text
29. Total value of IAT transactions handled through FedGlobal grew from $1.33 billion in 2012 to $1.94 billion in 2014. Return to text
30. Transaction volume to Canada increased 65.4 percent from 2012 and 2014, from 42,421 to 70,159 IAT transactions. Return to text
