FedNow, RTP Connectors Launch Cross-Border Payments Race

If the U.S. finally gets 24/7 instant payments, why do cross-border transfers still feel like they’re stuck in the 1990s? New rule changes for the FedNow Service and RTP Network aim to fix that, kicking open a door that’s been closed since these systems launched. According to a report by American Banker, these rails are taking “baby steps” to facilitate faster, more efficient international transactions. This move isn’t about launching a new global highway, it’s about wiring the U.S. leg of the journey for speed, setting off a quiet but critical race to modernize the back end of sending money abroad.

Why Does the "Last Mile" of a Cross-Border Payment Take So Long?

Sending money internationally often feels like flying first-class only to be stuck in a traffic jam on the way home from the airport. The core of the problem isn't the international flight itself, but the slow domestic leg once the money arrives in the destination country.

Swift data shows that, on average, the international portion accounts for less than 20% of a payment's total journey time. The remaining 80% is spent in the "last-mile" stage within the destination country. Today, that last mile is often a same-day ACH or wire transfer, which operate on business hours and batch processing.

This creates visible friction. An international payment arriving at 7 p.m. ET might wait until the next morning for domestic settlement. One hitting the U.S. on a Saturday could sit until Monday.

"The U.S. really has to figure out a way to connect to these networks," Gareth Lodge, a principal analyst at Celent, told American Banker, pointing to growing regional networks like the Arab Monetary Fund's Buna and the ASEAN-focused Nexus Global Payments.

The competitive pressure is real. As we've seen with Brazil's push to export its Pix payments system globally, countries are building powerful domestic real-time rails and starting to link them. The U.S. systems, which have focused overwhelmingly on domestic volume, risk becoming isolated islands in an increasingly connected world.

What Rule Actually Kept FedNow and RTP Domestic in the First Place?

To understand the change, you need to see the lock on the door. The RTP Network (run by The Clearing House) and the FedNow Service (run by the Federal Reserve) are the U.S.'s two separate, non-interoperable instant payment rails. They enable irrevocable, 24/7 credit pushes that settle in seconds. But their design had a critical, intentional limitation.

"Since inception, the Clearing House's RTP Network and the Federal Reserve's FedNow Service have focused on faster payments for domestic transactions, with an eye toward an eventual cross-border expansion."

The lock was a combination of operational rules and network architecture.

For FedNow, the barrier was Regulation J. This rule currently prohibits FedNow participants from using intermediaries other than Federal Reserve Banks. Since cross-border payments inherently require a correspondent bank or another intermediary to bridge between countries, this made FedNow transactions effectively domestic-only. Both the originator and beneficiary had to be customers of U.S. banks.

For the RTP Network, the rules similarly restricted participation and transaction flow to domestic financial institutions. The network was built for U.S.-to-U.S. payments, with no formal mechanism for a foreign bank to be a direct participant or for a transaction leg to cross a border.

How Do the New Rules Crack the Door Open for Foreign Banks?

The changes are surgical, targeting those specific locks.

The Federal Reserve has proposed amending Regulation J to permit FedNow participants to use intermediaries other than Fed banks. This would allow a U.S. bank to use a correspondent for the international portion of a transaction while using FedNow to settle the U.S. leg in real time. The comment period closed in June 2026, and the industry is awaiting finalization.

The Clearing House is implementing a rule change for the RTP Network that would allow one leg of a transaction to involve a foreign bank. They are also launching a pilot with banks to experiment with cross-border use cases.

"Operating instant payments 24/7 is extremely important for a multi-leg process," said Jim Colassano of The Clearing House. "It's something we hear from the market, and we're trying to be as responsive as possible."

The model beginning to emerge is one of corridor-by-corridor linkage, not a single global network. As Irene Skrynova, CEO of global payments at fintech Unlimit, described it: "Countries are building strong domestic real-time systems... and connecting them to each other, corridor by corridor... The future of cross-border payments looks less like a single global highway and more like a growing network of local systems that link up."

Why Won't Your Next International Payment Be Instant?

This is the crucial gap between enabling infrastructure and end-user experience. The rule changes are necessary plumbing work, but they are not sufficient for "instant" cross-border payments. Mark Majeske of Alacriti called it a "crawl-before-you-walk scenario."

Speed on the U.S. rail is now technically possible, but several critical roadblocks remain in the wider process.

• Compliance at Speed: Sanctions screening and Anti-Money Laundering (AML) checks must now happen in real time to keep pace with instant settlement. This is a major operational shift for banks. Industry groups have even suggested a pilot period where institutions opt into cross-border FedNow activity to manage this risk.
• The Foreign Exchange Bottleneck: Currency conversion often remains a manual, pricing, and timing hurdle outside the instant rail. The real-time movement of dollar funds doesn't automatically mean real-time conversion to pesos or euros.
• The Correspondent Banking Middle: The rule changes allow the use of intermediaries, but they don't eliminate them. The international leg still relies on the existing, often slower, correspondent banking network.
• Data Stripping and Errors: Different countries' payment systems use different message standards. Payment data can get lost or truncated between them, leading to failures or misdirected payments that "still take days to unwind," as Skrynova noted.

As Skrynova starkly put it in her email: "Solve them, and cross-border catches up with domestic. Solve only the U.S. leg, and we've built a fast on-ramp to a road that still has traffic lights."

This complexity mirrors challenges seen in other frontier payment systems, where speed exposes new risks, as pioneers in AI-agent payments are also discovering.

What Problems Do Banks and Fintechs Need to Solve Next?

The forward-looking work shifts from rule-writing to operational overhauls and strategic partnerships.

For Banks: Treasury and Compliance Rebuild The old model allowed overnight funding and manual checks. "In a world of connected instant systems, you don't. Money has to be in the right place, in the right currency, around the clock. Treasury teams have to rebuild around that," Skrynova wrote. Banks that master real-time liquidity management and embedded, automated compliance will gain a significant edge.

For Fintechs and Non-Banks: New Avenues for Access The changes create a more open network layer. Fintechs like Stripe and Wise strongly supported the Fed's proposal, seeing it as a way to plug their global networks into the fastest U.S. settlement rail. They can now potentially offer services that use FedNow or RTP for the U.S. leg, providing a smoother experience for businesses and consumers. Stripe even argued for the Fed to revisit FedNow's on-behalf-of residency restrictions to further open access.

The End Game: Pressure on the Total Cost and Experience The ultimate goal is not just speed, but reducing the total cost and opacity of cross-border payments. As these rails connect, they put pressure on every slow, expensive link in the chain, particularly traditional correspondent banking.

The rule changes are a down payment on that future. They signal that the U.S. is finally, deliberately, wiring its instant payment infrastructure to the world. The real race is just beginning: who will build the services, solve the operational headaches, and ultimately deliver the seamless, affordable cross-border payment that has been a decade behind everywhere else. Watch which banks and fintechs announce the first live corridors, and how they tackle the hard problems of compliance and currency that sit between the rails.

Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.

Impact Analysis

• Rule changes for FedNow and RTP could drastically reduce cross-border payment delays by addressing the slow domestic settlement leg that accounts for 80% of transfer time.
• The move signals the US joining a global race to modernize payment infrastructure, competing with regional systems like Buna and Nexus Global Payments.
• Consumers and businesses will experience less friction with international payments that arrive outside business hours, eliminating weekend and overnight settlement waits.