FedNow Opens Door to Cross-Border Instant Payments

The Federal Reserve is taking its instant payment system global. Federal Reserve Financial Services said Wednesday (Sept. 23) that the FedNow® Service will soon support cross-border transactions. The move is the first major step beyond U.S. borders for FedNow since it launched in July 2023. Until now, the service has handled only domestic payments.

The new feature will let banks and credit unions serve customers whose payments involve parties outside the U.S. It will work whether an institution is sending or receiving the money. FedNow will handle the U.S. part of each payment. The overseas part will move through correspondent banks, which transfer money between countries on behalf of other banks. The Fed said the design keeps participants in line with the payment standards shaping the industry.

A group of early adopters will first test new message formats built for the U.S. leg of these payments. The Fed did not name the institutions. It said all FedNow participants will eventually be able to adopt the new formats. Possible uses include international payroll, corporate payments, insurance claims and global treasury management.

The Fed framed the launch as a direct response to its customers. “Cross-border transaction capabilities will give financial institutions powerful new ways to serve internationally active customers. After several years focused on growing the domestic instant payments market, this is an important first step toward meeting the global needs emerging across our ecosystem,” said Nick Stanescu, chief FedNow executive. “Participants have consistently told us that enabling cross-border use cases is a priority, and this milestone reflects our commitment to delivering on that feedback.”

What comes next depends on testing and on regulators. The Fed has not set a date for a wide launch. In April, the Fed’s board proposed changes to Regulation J, the rule that governs FedNow. The change would let banks use intermediaries other than Federal Reserve Banks to send FedNow payments. That proposal has not yet been finalized. Stanescu called the announcement “just the beginning of what’s to come.”

Cross-border payments have been a steady theme in PYMNTS coverage. In July, PYMNTS reported that FedNow was readying cross-border and request-for-payment pilots. Overseas, the European Central Bank is exploring a link between Europe’s instant payment rail and Brazil’s Pix. In Asia, five countries are connecting their domestic instant payment systems through a common framework. And companies selling abroad are bundling local payment methods to cut the work of entering new markets.