The Federal Reserve plans to begin sending automated clearing house payments to Canada.

The Fed's retail product office would adopt rules from the National Automated Clearing House Association that govern the conversion of U.S.- style electronic payments into the Canadian ACH format.

As a gateway operator-a role introduced by Nacha in 1994-the Fed would enable low-cost payments between the U.S. and Canadian and Mexican ACH networks.

"We see this as a great opportunity for small institutions that may not have an easy vehicle for collecting and sending payments internationally," said Vicki Anderson, assistant vice president of the Federal Reserve Bank of Atlanta.

Wells Fargo & Co., by dint of its merger with Norwest Corp., remains the only private bank so far to adopt the rules. Visa U.S.A., which provides clearing services in competition with the Fed's, is also a gateway operator.

Banks may be more willing to work with the Fed than with correspondent institutions, said Scott Lang, senior director of Network Products at Nacha.

"Banks are reluctant to push their volumes through another bank for competitive reasons," he said.

As many as 10 institutions have indicated they would participate in the Fed's cross-border program, including Northern Trust Corp., SunTrust Banks Inc., and Mellon Bank Corp.

"We hope to have some live payments flowing next month," Ms. Anderson said.

The Mexican automated clearing house, Cecoban, has backed out of its gateway operator endeavor, Mr. Lang said. Other pressures on Mexican banks have pushed cross-border payment capabilities down on their priority lists.

"There is not enough incentive for them to get involved," Mr. Lang said.

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