FedNow Expands to Cross-Border Payments
The US Federal Reserve is expanding its FedNow real-time payments system to enable cross-border transactions. This move aims to allow participants in the system to make international transfers, in addition to domestic payments. Currently, FedNow only permits two US banks other than a reserve bank for fund transfers.
In response to participant interest in using the service for cross-border instant payments, the Fed board voted unanimously in April to support a proposed change to its regulations. This change will allow users to use intermediaries other than reserve banks for international transactions.
The FedNow portion of cross-border transactions will cover the US domestic leg, while the international portion will move through established correspondent banking arrangements. A group of organizations is testing enhanced message formats that facilitate sending and receiving the US domestic leg of cross-border payments.
Nick Stanescu, chief FedNow executive, says: 'Participants have consistently told us that enabling cross-border use cases is a priority, and this milestone reflects our commitment to delivering on that feedback.'