The US Federal Reserve has introduced a public consultation on a regulatory update that would open its FedNow real-time payments platform to international transfers for the first time. FedNow, which began operations in 2023, functions as a high-speed interbank settlement network designed for instant domestic payments. Under current rules, the system bars any third-party intermediaries except the Federal Reserve’s own reserve banks.
As a result, every transaction is limited to a simple chain involving just the originating bank, the receiving bank, and a reserve bank—restricting its use exclusively to transfers within the United States.
Demand for broader applications has grown steadily. Participants in the network have urged the Fed to expand capabilities so that FedNow could serve as the domestic leg of cross-border instant payments.
They argue that such a move would deliver faster settlement times and greater operational efficiency for businesses and consumers moving funds overseas.
In response, the Federal Reserve Board of Governors has unanimously endorsed a proposed amendment to its operating rules.
The change would permit authorized participants to enlist outside intermediaries—such as correspondent banks—for handling the foreign portion of an international payment while routing the US segment through FedNow.
Officials believe the adjustment could encourage private-sector innovation in global payment services and unlock additional use cases beyond cross-border transfers.
The proposal is now subject to a 60-day public comment period, allowing banks, technology providers, and other stakeholders to share their views before any final decision.
Industry professionals have, for the most part, reacted to the development with cautious optimism.
Kellie Johnson, senior vice president for payments in the Americas at RedCompass Labs, described the step as a meaningful advance toward integrating FedNow into the global payments ecosystem.
She noted that the move dovetails with international efforts, including those led by the G20, to link national real-time payment systems and reduce friction in cross-border flows.
At the same time, Johnson highlighted important caveats. Granting access to intermediaries does not automatically guarantee seamless interoperability.
Persistent obstacles remain, including foreign-exchange processing, differing regulatory requirements across jurisdictions, and the still-limited overall adoption of FedNow among US financial institutions.
She also pointed out that inserting an additional party into the transaction chain could inadvertently increase complexity rather than deliver the speed and transparency that businesses and individuals now expect from modern payment services.
A central issue going forward, Johnson added, will be determining which organizations step into the intermediary role.
Traditional correspondent banks have long dominated this space, but major card networks such as Visa and Mastercard are now said to be expanding their own cross-border infrastructures.
The competition that emerges could fundamentally alter the economics and structure of correspondent banking worldwide. If adopted, the regulatory update would mark a significant evolution for FedNow, potentially positioning the US instant payments network as a more competitive solution.