FedNow eyes intermediaries

The Federal Reserve is trying to change one quiet rule inside FedNow, and that one rule would let a payment touch more institutions before it is finished. On April 8, 2026, the Board asked for public comment on a proposal to let banks and credit unions use intermediaries when they send funds through FedNow. (federalreserve.gov) Right now, a FedNow transfer can include only two United States banks. The Fed says that limit is why FedNow has effectively been a domestic rail since it launched. (federalreserve.gov, federalreserve.gov) FedNow itself is the Federal Reserve’s instant-payment system, and it went live on July 20, 2023. It moves money between bank accounts in near real time, 24 hours a day, 7 days a week, 365 days a year. (federalreserve.gov) The new idea is simple: keep FedNow for the United States leg of a payment, then let another bank handle the foreign leg. The Fed’s example is a correspondent bank, which is the bank another bank uses like a local agent in a different country. (federalreserve.gov) That means a bank in the United States could send money instantly to its correspondent through FedNow, and the correspondent could push the payment onward outside the country. The foreign bank at the far end would still sit outside FedNow’s rulebook, but the domestic handoff could happen on an instant rail instead of a slower batch process. (federalreserve.gov, federalreserve.gov) The Fed says this would make FedNow look more like Fedwire Funds, the older wholesale payment system that has allowed intermediaries for decades. In the staff memo, the Board says the change would give private firms a second real-time gross settlement rail for cross-border products, alongside Fedwire. (federalreserve.gov) Real-time gross settlement means each payment is settled one by one, with final money, instead of being piled into a batch for later. That is why banks like instant rails, and it is also why mistakes get harder to hide once more parties and ledgers are added to the path. (federalreserve.gov, ecfr.gov) A cross-border payment that feels like one tap to a customer can become several linked events under the hood: one posting at the sending bank, one settlement inside FedNow, one message to a correspondent, and one credit at the foreign bank. If any one of those steps fails after another one succeeds, the banks need a clean way to detect duplicates, reverse side effects, and match records later. (federalreserve.gov, ecfr.gov) That is why this proposal is less about a new consumer app than about plumbing. The Fed is not changing who can connect to FedNow; it is changing the legal path so more transfers can happen before and after the instant domestic leg. (federalreserve.gov) The comment period runs for 60 days after the proposal is published in the Federal Register. If the rule is adopted, banks that already sell international payments would get a new way to stitch an always-on United States settlement rail into a payment chain that still depends on correspondent banking abroad. (federalreserve.gov, federalreserve.gov)