FedNow starts testing cross-border payments, its first step beyond the US since launch

Federal Reserve Financial Services said a group of early-adopter institutions will test enhanced FedNow message formats that carry the US domestic leg of cross-border payments. It is the first extension of the instant payment service beyond domestic transfers since it launched in July 2023.

In the model, FedNow settles the US part of an international payment in seconds, while correspondent banks move the money on the overseas side. Banks and credit unions can use it whether they are sending or receiving.

The legal piece is not finished. In April the Fed Board proposed amending Regulation J so FedNow participants can use intermediaries other than Reserve Banks, which is what makes cross-border use possible. A general rollout depends on that rule; no launch date has been published, and other participants will be offered the new messages as testing progresses.

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