This would mark a change from the current rules, in which a transfer of funds sent through the FedNow Service can include only two U.S. banks, the Fed said in a Wednesday press release.
“This additional flexibility would support new private sector use cases for the FedNow Service,” the Fed said in the release. “For example, it would allow U.S. banks to use FedNow to transact with correspondent banks to facilitate the international portion of a cross-border payment.”
The Fed invited public comment on the proposed rule and will accept comments for 60 days after the proposal’s publication in the Federal Register, according to the release.
The proposal was unanimously approved by the Federal Reserve Board in a Tuesday (April 7) board vote.
In a board memo on the proposal, Fed staff wrote that when the Board announced details of the FedNow Service in 2020, it said that the service would initially only support domestic instant payments to ensure a timely launch but that the Board would consider adding cross-border payment capabilities at a later date.
“Since the launch of FedNow, participants have expressed interest in using the service to initiate or receive cross-border instant payments as a means of improving the speed and efficiency of cross-board payments,” Fed staff wrote in the memo.
The FedNow Service was launched in July 2023 as a nationwide payments infrastructure that facilitates instant payment capabilities. At the time, it was the first new nationwide payments infrastructure to be implemented in about 40 years.
Feedback from the industry guides the priorities of the FedNow Service, Chief FedNow Executive Nick Stanescu told PYMNTS in an interview posted in November.
That collaboration began before the service’s launch in 2023 with pilot programs and advisory boards and has continued through quarterly town halls and direct consultations.
“We’re going to see more participants, more volume, more new features and functionality, and more innovation,” Stanescu said. Instant payments, he added, are “the new normal in money movement.”
