FedNow Could Go Cross-border Under Federal Reserve Rule Change

The US Federal Reserve Board is inviting public comment on a proposal that would allow US banks and credit unions to use intermediaries to transfer funds through the FedNow service.

The Fed’s press release centered on private sector use cases by proposing an amendment to Regulation J that would allow US banks to use FedNow to leverage correspondent banks to support the international portion of a cross-border payment, while using FedNow for the US domestic portion. Currently, funds can only be transferred through the FedNow service between two US banks, despite participants expressing interest in using it to improve speed and efficiency in cross-border payments. The Fed has invited comments on the new proposal until June 9, 2026.

The Fed aims to add flexibility around transactions, rather than changing who can connect or how the domestic settlement process works. The notice also accounts for funds availability by clarifying that, in an outbound cross-border transfer, an intermediary bank (not the beneficiary’s bank) could accept the payment order over FedNow. As such, the beneficiary bank outside the US would not be obliged under Regulation J to make funds available immediately to the beneficiary. This means, as far as cross-border payments are concerned, there could still be barriers to instant payments across jurisdictions and institutions, depending on who the accepting bank is and where the beneficiary is located. Under the proposed amendment, intermediaries including non-US correspondent banks would be expected to let participants complete payments both domestically and internationally.

Traditionally, fintechs facilitating cross-border payments and transactions had to build complex tool chains comprising operational rails on one side, with correspondent banking relationships, foreign exchange, and compliance adherence on the other—all of which inevitably result in slower settlement windows. While the Fed is not promising to make cross-border payments instant end-to-end, its proposal to let private-sector providers combine FedNow’s domestic instant settlement with correspondent networks for the international leg could at least reduce settlement times and improve user experiences. This will be especially helpful for business supplier payments, gig worker payouts, remittances, and near-real-time treasury movements.

Should the proposed rule change become final, banks and infrastructure providers will have to revisit their cross-border payment processes, especially in the case of those that currently settle domestically on one timeline and internationally on another. For fintech product teams, this intermediary model could present a new integration service, whereby payments fintechs may need to support scenarios where a US bank transacts via FedNow to an intermediary before routing the international portion via correspondent banks with separate compliance checks, foreign exchange conversions, and available funds behaviors outside the immediate requirements of Regulation J. From a platform perspective, fintechs should benefit by making integration easy as the Fed works to onboard more banks.