FedNow Push Gains Momentum for Global Payments

Industry associations, payment companies and technology providers have largely welcomed the central bank's proposal to amend Regulation J, which governs transfers made through FedNow.

The proposed changes would allow U.S. banks and credit unions to use intermediary institutions when sending payments through the network, opening the door to more efficient international fund transfers.

Under the current framework, FedNow transactions are limited to transfers between two U.S. banks or credit unions.

The proposed amendment would allow payments to pass through intermediary or non-U.S. correspondent banks before reaching their final destination, bringing the service closer to the way correspondent banking functions today while preserving FedNow's around-the-clock availability.

Steven Hansen, a managing director at FTI Consulting specializing in payments strategy, said the proposal would enable FedNow to perform "a similar purpose as the Fedwire system does today".

In short, it would allow correspondent banking transactions to clear and settle on the final stage of the payment rail while avoiding the operating time limitations associated with Fedwire.

The Federal Reserve's consultation, which ran from April 10 through June 9, attracted 37 responses from businesses and individuals, with much of the payments industry expressing support for the proposal and encouraging the central bank to move quickly toward implementation.

Among the strongest endorsements came from payments company Stripe. Jonah Crane, the firm's Head of Global Regulatory and Policy Strategy, described the proposal as "sound policy" and urged the Federal Reserve to finalize the amendments without delay.

Stripe argued that while FedNow already operates continuously throughout the year, cross-border payments remain constrained because existing alternatives, including Fedwire and same-day Automated Clearing House transactions, are unavailable during weekends and other non-business periods.

"That gap is among the factors driving demand toward alternative settlement mechanisms, including payment stablecoins," Crane wrote in the company's submission.

"The Board has a direct and legitimate interest in ensuring that its own payment systems keep pace."

Although industry support appears strong, the Federal Reserve has not indicated when it expects to finalize the proposal.

A spokesperson for the central bank said there are currently no updates regarding either implementation or the next stage of the rulemaking process.

For payments technology providers, however, the proposal represents a natural evolution of a platform that has expanded rapidly since its launch in 2023.

Mihail Duta, Director and Global Solutions Consultant for Payments at Finastra, described the proposal as "a normal next step in the evolution of FedNow."

FedNow now counts approximately 1,800 participating banks and credit unions, giving roughly half of U.S. checking and savings accounts access to the instant payment network, despite representing only about one-fifth of the country's approximately 8,500 financial institutions.

Duta believes that level of participation is already sufficient to support meaningful expansion into cross-border use cases.

"There's definitely enough financial institutions and credit unions that have a cross-border need, which this FedNow proposal would help with," he said.

Supporters argue that expanding FedNow beyond domestic transfers would not only improve payment speed and operational efficiency but also reinforce the Federal Reserve's role as global payment systems continue evolving.