FedNow may open to intermediaries and that changes the cross-border payments equation

The Federal Reserve is seeking public comment on a rule change that would let U.S. banks route FedNow transfers through third-party intermediaries for the first time, unlocking a path for instant payments to connect with international networks.

The Federal Reserve Board has opened a public comment period on a proposal that would structurally expand how FedNow, the Fed's real-time gross settlement network, can be used. Under current rules, a FedNow transfer is limited to two U.S. depository institutions. The proposed change would permit a U.S. bank or credit union to route funds through an intermediary, opening the door to correspondent banking relationships and, critically, the international leg of cross-border payments.

FedNow launched in July 2023 and has signed up over 1,000 participating institutions as of early 2026, but adoption has been constrained partly by its closed, domestic-only architecture. This proposal is the most significant structural change the Fed has floated since launch.

If the proposal is accepted: what changes?

The most immediate implication is cross-border reach. Today, a U.S. bank sending an international payment must exit FedNow entirely and route through SWIFT or a separate correspondent banking arrangement. Under the proposed model, FedNow could handle the domestic leg while an approved intermediary manages the handoff to a foreign network, reducing friction, cost, and settlement time for international transfers.

It also creates a viable commercial role for non-bank payment service providers and fintech intermediaries that have so far been locked out of direct FedNow participation. For community banks without international infrastructure of their own, access to a correspondent intermediary via FedNow could meaningfully extend their service offering to small business and immigrant remittance customers.

If the proposal is rejected or stalls: what stays broken?

FedNow remains a high-quality domestic rail with limited network effect at the border. The U.S. continues to rely on SWIFT and correspondent banking chains for international flows, infrastructure that is slower, more expensive, and increasingly targeted by regulators for its opacity. The competitive gap between U.S. instant payment infrastructure and systems like the EU's SEPA Instant or India's UPI-linked international corridors widens further.

Why this matters to FinanceX readers

For payments professionals and investors tracking real-time payment infrastructure, this is a pivotal rule-making moment. Allowing intermediaries into FedNow doesn't just expand a product feature, it repositions the network as potential backbone for the next generation of U.S. cross-border payment corridors. Watch which fintech and correspondent banking players file comment letters; their arguments will signal where commercial interests align and where opposition is likely to slow the timeline.

By Koen Vanderhoydonk - FinanceX Magazine