THE WALL STREET JOURNAL

As U.S. leaders craft policies to curb illegal immigration from Mexico, the U.S. Federal Reserve is devising programs to extend banking services to undocumented immigrants. A new remittance program aims to bring Mexican migrants who send money home into the mainstream U.S. financial system, regardless of their immigration status.

Dubbed "Directo a Mexico," the remittance program enables U.S. commercial banks to make money transfers for Mexican workers through the Federal Reserve's own automated clearinghouse, which is linked to Banco de Mexico, the Mexican central bank.

To use the service, a Mexican need only possess a matricula consular, an ID issued by the Mexican consulate in most major U.S. cities to those with proof of Mexican birth or citizenship, or a picture ID card issued by the U.S. or another foreign government. The idea is to make it cheaper and safer for Mexican workers to send funds to their relatives.

"We offer an extremely competitive exchange rate," said Elizabeth McQuerry, an Atlanta-based assistant vice president for the Federal Reserve Bank's retail payments office. "We cost a third of other providers."

The majority of immigrants currently make transfers, which average $350 each, through companies like Western Union or a hodgepodge of wire-transfer firms, couriers and others that operate out of storefronts in Hispanic enclaves. Family members then collect the wired cash at a shop in their town or village.