The Federal Reserve has introduced new message formats for the FedNow service to facilitate cross-border instant payments. This feature allows banks and credit unions to process international transactions by handling the U.S. portion of the payment through FedNow, while the overseas leg is managed via correspondent banks.
A group of early adopters is currently testing these message formats, with plans to eventually roll out the capability to all FedNow participants. The system is designed to support various use cases, including international payroll, corporate payments, insurance claims, and global treasury management.
The Fed has not yet announced a specific date for a wide-scale launch, as the timeline remains dependent on testing results and regulatory developments. In April, the Federal Reserve Board proposed amendments to Regulation J to allow banks to use intermediaries other than Federal Reserve Banks for sending FedNow payments.
Nick Stanescu, chief FedNow executive, stated that enabling cross-border functionality was a priority identified through feedback from financial institutions. This move follows the Fed's previous focus on expanding the domestic instant payments market within the United States.
