Fed Proposes Opening FedNow to Cross-Border Payments: What It Means for International Transfers
What did the Fed propose?
On April 8, 2026, the Federal Reserve Board unanimously voted to propose allowing U.S. banks and credit unions to use intermediaries to transfer funds through the FedNow Service. The proposal was published in the Federal Register on April 10, 2026, with a 60-day comment period closing approximately June 9, 2026.
Currently, FedNow can only process domestic transfers between two U.S. banks. Under the proposal, either the sending or receiving U.S. bank could act as a correspondent bank for non-U.S. institutions — enabling the domestic leg of a cross-border payment to settle in seconds on FedNow.
How would cross-border FedNow payments work?
The proposed model uses a hybrid approach with separate legs:
- International leg: Handled by intermediaries (including non-U.S. correspondent banks) outside of FedNow — similar to how SWIFT operates today
- Domestic leg: Settles within seconds on FedNow between eligible U.S. participants, 24/7/365
This mirrors how the existing Fedwire Funds Service has operated for decades — FedNow is simply catching up. The key difference: FedNow runs 24/7/365, while Fedwire operates 22 hours a day on business days.
FedNow vs SWIFT vs Fedwire
| Feature | FedNow (Proposed) | SWIFT | Fedwire |
|---|---|---|---|
| Settlement speed | Within seconds | Varies by route | Same day |
| Availability | 24/7/365 | Varies by bank | 22 hours on business days |
| Per-transfer cost | $0.045 | Set by each bank | $0.195–$0.97 (by volume tier) |
| Cross-border | Proposed via intermediaries | Native | Via intermediaries |
| Participants | 1,700+ institutions | 11,000+ institutions | ~5,000 institutions |
What this means for remittance senders
If adopted, FedNow cross-border capability could significantly reduce the cost of the domestic settlement leg of international transfers. Currently, the average cost of sending a $200 remittance is 6.4% globally. Much of this cost sits in correspondent banking fees and slow settlement — exactly what FedNow addresses.
For providers like Wise, Remitly, and Western Union that already use U.S. bank partners, FedNow integration could mean:
- Faster funding: Sender's money reaches the provider's account in seconds rather than hours
- Lower processing costs: $0.045 per transfer vs $0.195–$0.97 on Fedwire, depending on volume tier
- 24/7 settlement: No more waiting for business hours to process the U.S. leg
The international leg (the part that crosses borders) would still use existing rails — SWIFT, local payment systems, or direct integrations. But removing the domestic bottleneck is significant.
Timeline and what happens next
- Now – June 9, 2026: 60-day public comment period
- H2 2026 (estimated): Final rule published after reviewing comments
- 2027 (estimated): First cross-border FedNow transactions go live
The G20 has set targets of 1% cost for retail payments and 3% for remittances — both still exceeded. FedNow's entry into cross-border payments brings the U.S. closer to these targets, joining the EU's instant payments mandate and India's UPI international expansion as part of a global push toward faster, cheaper cross-border settlement.
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