US Federal Reserve It has launched a public consultation on a regulatory update that would open FedNow The first real-time payment platform for international transfers. Launched in 2023, FedNow functions as a high-speed interbank clearing network designed for domestic instant payments. According to current rules, the system bans all third-party intermediaries except: Federal Reservetheir own reserve banks.
As a result, each transaction is limited to a simple chain that includes only the source bank, the receiving bank, and a receiving bank. reserve bank— restricting its use to transfers within the United States only.
Demand for broader applications has increased steadily. Network participants have called for the Fed to expand its capabilities so that FedNow can serve as the domestic leg of instant cross-border payments.
They argue that such a move will yield faster results. residential More time and greater operational efficiency for businesses and consumers moving funds abroad.
In response, the Federal Reserve Board of Governors unanimously approved a proposed change to operating rules.
The change will allow authorized participants to appoint external intermediaries, such as correspondent banks, to handle the foreign portion of an international payment while routing the U.S. segment through FedNow.
Officials believe regulation could spur private sector innovation globally payment Unlock additional use cases beyond services and cross-border transfers.
The proposal is now subject to 60 days of public comment and allows banks to: technology providers and other stakeholders will share their views before any final decision.
Industry professionals mostly reacted to the development with cautious optimism.
Kelly JohnsonRedCompass Labs’ senior vice president of payments in the Americas called the move a meaningful advance toward integration FedNow To be included in the global payment ecosystem.
The move dovetails with international efforts, including those led by the G20, to connect national real-time payment systems and reduce friction in cross-border flows, he said.
Johnson also underlined important warnings. Granting access to agents does not automatically guarantee seamless interoperability.
Persistent barriers remain, including: foreign currency processing, differing regulatory requirements across jurisdictions, and the still limited overall adoption of FedNow among U.S. financial institutions.
He also pointed out that one more party should be included in the system. process Chain can inadvertently increase complexity rather than providing the speed and transparency that businesses and individuals now expect from modern payment services.
Johnson added that a key issue going forward will be: specification Which organizations are stepping into the intermediary role?
Traditional correspondent banks have long dominated this space, but Visa and MasterCard They are now said to be expanding their own cross-border infrastructure.
The resulting competition can fundamentally change the economy and structure of the reporter. banking worldwide. If adopted, the regulatory update would mark a significant development for FedNow and potentially position the US instant payments network as a more competitive solution.
