Fed Proposes Allowing Intermediaries for FedNow Cross-Border Payments

April 17, 2026

Fed proposes allowing intermediaries for FedNow cross-border payments

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On April 8, the Fed requested comment on a proposed rule amending subpart C of Regulation J to permit banks and credit unions to use intermediaries other than Reserve Banks to transfer funds through the FedNow Service. As previously covered by InfoBytes, the FedNow Service launched in July 2023 as an instant interbank payment system for banks and credit unions to transfer money for their customers. Currently, a FedNow transfer may include only two U.S. banks other than a Reserve Bank, effectively limiting the service to domestic payments. When the Fed announced FedNow details in 2020 (covered by InfoBytes here), it noted it would consider adding cross-border capabilities at a later date. According to the Fed, participants have since expressed interest in using FedNow for cross-border instant payments, and the proposed amendment would support these use cases.

Under the proposal, participants could designate an intermediary bank, such as a correspondent, to handle the international portion of a cross-border transaction while using FedNow for the domestic leg. This arrangement would, according to Fed staff, make available a second real-time gross settlement payment rail alongside Fedwire. The Fed noted that the proposal does not create material new risks related to money laundering, sanctions evasion, or payment system integrity. As Fedwire has permitted intermediaries for decades, the Fed stated the correspondent banking model is well established, and that the amendments would align the two services without altering the payment flow or changing which entities may connect. Regulation J’s immediate funds-availability requirement would continue to apply only when a beneficiary’s bank, rather than an intermediary, accepts a payment order over FedNow. The Fed also stated it does not believe the amendments would adversely affect other service providers’ ability to compete with Reserve Banks. Comments must be submitted by June 9.

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