FedNow expands cross-border payments

The Federal Reserve Financial Services announced Wednesday that FedNow will soon support cross-border transactions, the first major step beyond U.S. borders since its July 2023 launch.

Cross-border payments work through correspondent banks

FedNow handles U.S. payments while overseas transfers use correspondent banks, which move money between countries on behalf of other banks.

Early adopters test new message formats

A group of early adopters will first test new message formats for U.S. payments, with all FedNow participants eventually adopting them.

Cross-border use cases include payroll and insurance

Possible uses include international payroll, corporate payments, insurance claims, and global treasury management.

Fed executive highlights customer priority

Nick Stanescu, chief FedNow executive, said cross-border capabilities will serve internationally active customers and meet global needs emerging across the ecosystem.

“Cross-border transaction capabilities will give financial institutions powerful new ways to serve internationally active customers. After several years focused on growing the domestic instant payments market, this is an important first step toward meeting the global needs emerging across our ecosystem.”

Regulation J changes pending

The Fed has not set a date for a wide launch, as changes to Regulation J remain pending after April’s proposal.