FedNow Takes Step Towards Cross-Border Payments Capability

The Federal Reserve has announced that FedNow is moving closer to supporting cross-border payments. This means that participating financial institutions will be able to combine domestic settlement through FedNow with established correspondent-banking arrangements for international transactions.

The enhancement does not turn FedNow into an end-to-end global settlement network, but rather settles the U.S. portion of a payment in seconds while banks or approved intermediaries handle the overseas leg through existing cross-border arrangements.

A group of early adopters, including Payall Payment Systems, will test new FedNow message formats designed to carry information needed for international transactions. These messages are intended to provide faster and more transparent processing for U.S. institutions handling international payments.