The Fed wants to expand the FedNow payment system to include international transfers. Why is it doing this?

In April 2026, the U.S. Federal Reserve proposed opening its FedNow payment system—which currently serves only the U.S. market—to international transfers. As a result, 1,700 U.S. banks and credit unions could gain an alternative route for such transactions—bypassing Visa and Mastercard. In June, the regulator concluded its feedback period on this proposal—including input from major U.S. banks and other payment systems. What concerns them?

FedNow is a newcomer to the U.S. payments market. The Federal Reserve launched it in July 2023 as an alternative to commercial domestic payment solutions.

To enable FedNow to process international transactions, its regulations must be amended. Currently, only one of the country’s Federal Reserve Banks can act as an intermediary in a FedNow transaction, which automatically limits payments to within the United States. However, in April 2026, the Federal Reserve proposed allowing third-party intermediaries—including correspondent banks outside the U.S.—to participate in payment chains.

Until June 9, 2026, the Fed solicited feedback from market participants on its initiative. Oninvest reviewed their comments.

Judging by the feedback, the main question is how to ensure real-time compliance with sanctions and anti-money laundering regulations. For example, the American Bankers Association fears that differences in compliance procedures between U.S. banks and foreign intermediaries could delay transfers and is asking that participants not be fined for such delays. Bank of New York Mellon has proposed requiring intermediaries to independently monitor compliance with U.S. sanctions and anti-money laundering laws.

Wise has asked that rates for international transfers be brought in line with those for the domestic market. Otherwise, they will be unattractive to businesses, the company warned.

Visa also submitted comments. The company expressed hope that various payment systems would be compatible with FedNow. Clearing House—FedNow’s competitor in the U.S. market—proposed rolling out the cross-border functionality in phases so that system participants would have time to adapt their systems.

Mastercard did not submit its comments and suggestions regarding the operation of FedNow to the Federal Reserve.

After gathering feedback from market participants, the U.S. central bank will review the proposals and present the final version of the new regulation—which will be published in the Federal Reserve’s registry. No deadline has been set for the completion of this work. Typically, new regulations take effect no sooner than 30 days after publication. Market participants are often given more time to adapt to the new requirements.

By launching this project, the Fed hopes to compete for a share of the private sector’s cross-border payments by encouraging banks to process the U.S. portion of transactions through FedNow, according to its press release.

The Fed does not aim to create a “new SWIFT,” according to Mikhail Paramonov, a senior analyst at Freedom Finance Broker. It has a different, entirely pragmatic goal: to allow banks to use FedNow as the dollar segment of international payments.

This will make cross-border transfers cheaper and faster while maintaining the dollar’s competitiveness and enhancing the appeal of U.S. infrastructure. In this case, the U.S. portion of the transaction will be processed through FedNow channels, while the international portion will be processed through the participants’ correspondent network.

Access to cross-border payments will bring the speed of processing in the U.S. in line with the pace already achieved in the U.K. and the EU, according to Hugh Thomas, a leading analyst for commercial and corporate affairs at Javelin Strategy & Research. According to him, the development of instant payments in these three markets, along with the use of a unified standard for electronic financial messaging supported by SWIFT, will lead to the emergence of a variety of cross-border payment configurations.

However, the emergence of such players sometimes leads to SWIFT losing market share in the region. For example, this happened when the SEPA (Single European Payments Area) instant payment services were launched. According to Giorgio Andreoli, CEO of the European Payments Council (which manages SEPA), their penetration rate in the eurozone reached 90% in 2025. SEPA, which currently has 41 member states, is actively expanding by inviting countries outside the EU to join. Among them are Montenegro, which has joined SEPA, and Turkey, which is considering such a move. Upon joining SEPA, these countries effectively gain “financial visa-free access” to the eurozone: cross-border payments in euros within the system are processed instantly and at low cost.

Oninvest asked SWIFT how the Fed’s initiative might affect its business model and revenue. As of the time of publication, the Belgian cooperative had not responded to the inquiry.

Payment giants Visa and Mastercard are expanding their instant cross-border payment services—Visa Direct and Mastercard Move—for the retail sector, as well as similar solutions for businesses. These services enable direct cross-border payments, often bypassing chains of intermediary banks.

FedNow is highly likely to become yet another component within the Visa and Mastercard ecosystems rather than offering them a full-fledged replacement in the U.S. market, concludes Mikhail Paramonov. According to him, Visa and Mastercard have a major advantage: they offer a ready-made global infrastructure for routing, compliance, currency exchange, dispute resolution, and access to billions of cards and accounts.

So far, both payment giants have chosen to partner with FedNow and are providing it with their solutions— Visa Alias Directory (which allows users to use an alias or proxy to initiate a payment) and Mastercard Bill Pay Exchange (an online messaging network).

When FedNow was launched, Visa CEO Ryan McInerney said that the company was not concerned about competition from it in the U.S. market. He cited the U.K. market as an example, where the FPS instant payment system for retail and CHAPS for corporate transactions have been in operation for some time. According to him, competition from these systems had not affected Visa’s financial results in the UK market. At the time, the company’s CEO, Michael Mibach, also asserted that card payment systems had demonstrated their simplicity and convenience to users, while FedNow still had to prove its advantages.

FedNow's transaction volumes are not comparable to Visa's. In its launch year, it processed 47,000 payments; last year, it processed 8.4 million. In 2025, 12.5 billion transactions were processed through Visa Direct. Mastercard does not disclose similar data for Mastercard Move in its financial reports.

Visa and Mastercard did not respond to Oninvest's inquiry.

This article was AI-translated and verified by a human editor