FedNow begins testing cross-border real-time payments

The Federal Reserve’s instant-payment service, FedNow, will launch international real-time transaction testing, extending its capabilities beyond domestic transfers after years of focused development. The initiative, revealed on Wednesday, involves collaboration with unnamed financial entities to refine message formats designed for cross-border payment scenarios, including payroll disbursements, corporate fund transfers, and property settlements. Once these adjustments are finalized, the updated technology will become accessible to all existing FedNow participants, as stated in the Federal Reserve’s official announcement.

This development responds to rising expectations for faster international money movement. Currently, businesses and individuals frequently encounter settlement delays when transferring funds across borders, sometimes waiting multiple days for completion. FedNow’s upcoming expansion aims to address this inefficiency by processing the U.S. segment of transactions instantly while continuing to rely on established correspondent banking networks for overseas portions—a framework analogous to the Fed’s long-standing Fedwire system.

The Federal Reserve’s initiative follows broader industry movements. Earlier in 2024, RTP, a competing real-time payment network operated by The Clearing House, approved its own set of cross-border operational rules. Financial institutions are actively investing in complementary technologies, with RTP projecting that live international payment capabilities will launch in early 2027. The network characterizes its function as providing the “instant last mile” for incoming cross-border funds, guaranteeing round-the-clock, 365-day access to U.S. demand deposit accounts with immediate confirmation upon receipt.

Banks participating in the trial will assess how the new message formats align with their existing infrastructure. While the Federal Reserve has not disclosed a specific timeline for full implementation, the testing phase suggests a gradual rollout, with broader adoption dependent on technical validation and regulatory approvals.

This expansion builds on the Federal Reserve’s earlier efforts to modernize payment systems.