Fed Seeks Comments on Intermediary Access for FedNow, Aiming to Boost Cross‑Border Payments

Why It Matters

Allowing intermediaries on FedNow could dramatically expand the service’s utility beyond domestic person‑to‑person transfers, positioning it as a key conduit for the domestic leg of cross‑border payments. This would give U.S. banks a faster, lower‑cost alternative to traditional correspondent banking, potentially reshaping pricing dynamics in the international payments market. The proposal also signals the Federal Reserve’s willingness to modernize its real‑time infrastructure in line with private‑sector innovations. By aligning FedNow with Fedwire’s long‑standing intermediary model, the central bank may encourage broader adoption among smaller institutions, fostering greater financial inclusion and competition in the payments space.

Key Takeaways

• FedNow currently restricts transfers to direct bank‑to‑bank connections, limiting it to domestic payments.
• The proposed amendment would let banks use intermediaries before and after the FedNow leg of a transaction.
• Changes would align FedNow with Fedwire, which has permitted intermediaries for decades.
• Public comments are accepted for 60 days, with a deadline in early June 2026.
• If adopted, the rule could enable instant settlement of the U.S. portion of cross‑border payments.

Pulse Analysis

The Federal Reserve’s move to solicit feedback on intermediary access reflects a broader industry push toward end‑to‑end instant payments. Historically, the U.S. has lagged behind Europe and Asia in offering real‑time cross‑border capabilities, largely because of fragmented infrastructure and legacy correspondent banking practices. By allowing an intermediary step, FedNow could bridge the gap between domestic instant settlement and the slower, often opaque international leg, creating a hybrid model that leverages the speed of RTGS while preserving the flexibility of existing correspondent networks.

From a competitive standpoint, the amendment could erode the advantage held by private‑sector players such as Visa Direct and Mastercard Send, which already support multi‑party routing and have built extensive global partnerships. If FedNow becomes a viable conduit for the domestic slice of cross‑border payments, banks may shift volume away from these networks, pressuring them to lower fees or accelerate their own interoperability initiatives. Moreover, smaller banks and credit unions—traditionally underserved by correspondent banking—could tap into larger institutions as intermediaries, leveling the playing field and expanding their service offerings to corporate clients.

Looking ahead, the Fed’s decision will hinge on balancing operational risk with the demand for speed. Intermediary involvement introduces additional points of failure and compliance complexity, especially around AML and sanctions screening. The Federal Reserve will likely require robust standards for data sharing, real‑time monitoring, and dispute resolution. If those safeguards are put in place, the rule change could catalyze a wave of innovation, prompting fintechs to develop new cross‑border solutions that sit atop FedNow’s expanded framework. The next few months will be critical as industry participants shape the final rule through their comments, and the outcome will set the tone for the United States’ role in the global instant‑payments arena.