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Fed Expanded FedNow Testing for Cross-Border Payments

Financial institutions can now test the integration of international payment chains with the FedNow instant network.

Updated on Sept. 24, 2026 in Financial Services

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The Federal Reserve has launched testing for cross-border payment integration within the FedNow network, aiming to facilitate faster international transaction settlement for banks. AI Illustration. Upload story photo >

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Do you trust that new instant cross-border payment systems will make your international money transfers safer?

The Federal Reserve has initiated testing for cross-border payment support within the FedNow network, leveraging enhanced ISO 20022 message formats. This move aims to meet growing bank demand for instant international transaction capabilities.

Why it matters

Current regulatory frameworks limit FedNow to domestic transfers by restricting the number of allowed participants in a chain, complicating international transactions. The proposed amendments to Regulation J and new messaging standards are intended to bridge this gap for financial institutions.

FedNow processed 4.997 million payments in Q2 2026, marking an 83.2% increase over Q1 2026 volume across the network of more than 1,500 participating financial institutions.

The players

Federal Reserve Financial Services

The operating arm of the Federal Reserve that manages the nation's payment infrastructure, including FedNow and Fedwire.

Payall Payment Systems

A payment processor participating in the initial cross-border testing phase of the FedNow network.

The details

Participating institutions are testing how to combine FedNow domestic settlement with existing correspondent-banking arrangements to handle international flows. By adopting enhanced ISO 20022 messaging, banks can pass the specific data required for cross-border transactions through the network. This testing phase includes Payall Payment Systems, which is working to integrate these protocols before a potential system-wide expansion.

Timeline

  1. July 2023: FedNow initial network launch occurred.

  2. July 2025: Fedwire migrated to ISO 20022 messaging standard.

  3. April 2026: Federal Reserve proposed Regulation J amendments.

  4. June 9, 2026: Public comment period for Regulation J closed.

  5. September 23, 2026: Federal Reserve announced next phase of FedNow.

Market Landscape

The proposed amendments to Regulation J follow a pattern of modernization seen in the 2025 migration of Fedwire to the ISO 20022 messaging standard. This initiative aligns with broader industry efforts to standardize cross-border communication protocols.

Financial institutions should monitor the pending approval of Regulation J amendments and Operating Circular 8, which are required for full-scale international rollout. Operators should also prepare for the new discount program beginning January 1, 2027.

The takeaway

The Federal Reserve is actively removing technical and regulatory hurdles to facilitate international instant payments for domestic banks. Operators should watch for final regulatory approval as a signal to begin evaluating current correspondent-banking costs against new FedNow capabilities.

What happens next

A new discount program for FedNow sending capabilities is scheduled to begin on January 1, 2027.

Further reading

For more on industry infrastructure developments, see our coverage of Financial Services.

Live Poll

Do you trust that new instant cross-border payment systems will make your international money transfers safer?