The Federal Reserve has proposed allowing intermediaries into FedNow transfers – a change that could open the instant payments rail to cross-border use for the first time
The Federal Reserve Board has opened a public consultation on a proposal which would allow US banks and credit unions to route funds through third-party intermediaries via the FedNow Service.
Under the current rules, a transfer sent through FedNow can involve only two US banks. This structure limits the service to domestic transactions because participants cannot move funds directly to institutions outside the US.
The Fed’s latest proposal, approved unanimously by the Federal Reserve Board on 7 April 2026, could extend the instant payments rail beyond domestic transactions for the first time since its 2020 launch.
FedNow’s domestic growth since its July 2023 launch has been rapid. Total settled payments reached more than 8.4 million in 2025, up from 1.5 million in 2024 and 47,262 in its launch year.
More than 1,500 financial institutions across all 50 states are now live on the service, with the transaction limit raised to $10m in November 2025 in response to growing commercial demand. The Federal Reserve’s long-term target is to connect roughly 8,000 of the nation’s 10,000 banks and credit unions.
Kellie Johnson, SVP, Payments Americas at RedCompass Labs, tells Payment Expert: “This is a positive step toward enabling cross-border payments through FedNow, and aligns with the G20’s push to interlink domestic real-time payment systems. However, interoperability isn’t solved by access alone.”
The proposal aligns with – but also lags behind – a broader global push to interlink domestic instant payment systems. In 2020, the G20 launched a roadmap to make cross-border payments faster, cheaper, more transparent and more inclusive, with most targets set for end-2027 – though its 2025 progress report concluded that improvements have not yet translated into tangible benefits for end-users, and that the 2027 targets are unlikely to be met on time.
Elsewhere, live linkages are already operational in India, where UPI is connected to payment systems in Singapore and the UAE, the ECB is exploring a link with UPI, and Project Nexus – backed by central banks across Southeast Asia – is designed to connect domestic instant payment systems through a single standardised connection, with live implementation set to begin in 2026.
While the FedNow proposal would bring the US closer to that model, there is still some distance to go in a regulatory sense before this becomes a reality for FedNow.
A domestic rail with international ambitions
Under the proposal, FedNow would still settle only between eligible US participants, with any cross-border component occurring through separate legs handled by intermediaries before and after the domestic portion of the transfer.
Practically, the proposal would allow a US bank to use FedNow to settle the domestic leg of an international payment while routing the cross-border segment through an established correspondent banking channel.
The Fed is no stranger to intermediaries, the central bank’s large-value settlements system – Fedwire Funds Service – has worked with intermediaries for decades.
The Fed has drawn directly on that comparison in arguing the success of FedNow going cross-border – claiming the move would bring FedNow into alignment with a well-tested existing model.
“There are still real challenges around FX, compliance across jurisdictions, and broader FedNow adoption,” says Johnson. “There is also a risk that adding another intermediary simply introduces more complexity without delivering the speed and transparency that businesses and consumers increasingly expect.”
Fed keeps its commitments
When the Federal Reserve announced details of FedNow in 2020, it said the service would initially support only domestic instant payments to ensure a timely launch, but that the board would consider adding cross-border capabilities at a later date.
Since the launch of FedNow, participants have expressed interest in using the service to initiate or receive cross-border instant payments as a means of improving the speed and efficiency of international transfers, according to a board memo accompanying the proposal.
The proposed Fed amendments would not change the payment flow between FedNow participants, nor would they alter which entities are eligible to connect to the service. Consumers and businesses would continue to access FedNow-enabled payments through their bank or credit union rather than connecting directly to the rail.
Johnson says, “A key question will be who fills that intermediary role – whether it is traditional correspondent banks or major card network players like Visa and Mastercard that are actively building out their cross-border infrastructure. That competition could significantly reshape the future of correspondent banking.”
Compliance concerns addressed?
The US central bank said it did not expect the changes to introduce new risks related to money laundering, sanctions evasion, or payment system integrity, noting that the Fedwire Funds Service has operated successfully with intermediaries.
The proposal would amend Subpart C of Regulation J, which governs the FedNow Service. Comments on the proposal are due within 60 days of publication in the Federal Register, with no firm implementation date set pending a final rulemaking.
