North of the Border

ACH Crosses into Canada

The Federal Reserve has begun offering Canadian International ACH Service to all financial institutions interested in making ACH payments in Canada. This new FedACH service provides a cost-effective, convenient and efficient method for exchanging payments between the United States and Canada.

An originating financial institution can use the Canadian International ACH Service to send both credits and debits to receivers in Canada. The transactions are originated using the National Automated Clearing House Association formats for cross-border payments. New Standard Entry Class codes CBR and PBR were created for corporate and consumer payments, respectively, and these items can be deposited in the same file as domestic payments.

However, international ACH items are batched separately and settle on the value date indicated in the ACH entry, either one or two days after origination for credits and one day after origination for debits. Financial institutions originate ACH transactions via FedACH in U.S. dollars and identify the currency that will be applied to the transactions upon receipt in Canada as either U.S. or Canadian dollars.

There are two important things to remember about cross-border payments--settlement is in U.S. dollars, and the Office of Foreign Asset Control regulations apply to these transactions.

You can initiate Canadian International ACH Service by completing the ACH Master Agreement Appendix H-International ACH Service Request form. Afterwards you will receive an implementation manual and testing support to help establish your Canadian cross-border service.

More information, including process and pricing data, is available on our national Financial Services web site, www.frbservices.org, or from your local account executive.

Too Many Canadian Checks? We Can Help!
If you are seeing an increase in the number of Canadian checks you are receiving and would like a clearing alternative, the Federal Reserve can help.

Here's how it works: Contact your local account executive, who will work with you and the Business Development staff at the Helena Branch of the Federal Reserve Bank of Minneapolis to provide you with instructions and the necessary forms for depositing your Canadian cash letter.

You can then begin sending your separately sorted Canadian cash letter, along with your regular daily cash letter deposits, to your local Federal Reserve office, which will forward your Canadian deposit to FRB-Helena for processing.

For more information, contact your local account executive or visit FRB-Helena's web site at www.minneapolisfed.org/frfs/check/canadian. There, you will find the Canadian Check Collection Service User's Guide.