WASHINGTON — The Federal Reserve has proposed allowing banks and credit unions to use intermediaries to send and receive payments through its FedNow real-time payments system, a move aimed at expanding access to instant payment services.
Under the proposal, financial institutions would be able to rely on third-party service providers to facilitate transactions over FedNow, rather than connecting directly to the system. The change would broaden the number of private-sector firms able to participate in the network.
Currently, payments sent through FedNow are limited to transactions between two U.S. banks, restricting the role of intermediaries and limiting broader ecosystem participation.
The central bank said the proposed change is intended to enhance flexibility and adoption of the platform, which launched in 2023 as the Federal Reserve’s entry into real-time payments.
Opening the Door
Allowing intermediaries could make it easier for smaller banks and credit unions to access FedNow services without building and maintaining direct connections, potentially lowering operational barriers and costs.
The proposal would also open the door for a wider range of payment providers and fintech firms to support real-time transactions, while transactions would continue to be settled through accounts held at the Federal Reserve.
The Fed is seeking public comment on the proposal as it evaluates how to expand the reach and functionality of the FedNow system while maintaining security and risk controls.
