Federal Reserve Proposes Intermediary Access to Expand Instant Payments
Washington, Wednesday, 8 April 2026.
The Federal Reserve’s April 2026 proposal allows intermediaries in FedNow, a pivotal shift poised to unlock instant cross-border payments and expand real-time transaction access for smaller banks.
Expanding the Reach of Instant Settlement
On Wednesday, April 8, 2026, the Federal Reserve Board officially initiated a 60-day public comment period for a proposal designed to permit United States banks and credit unions to utilize intermediaries for transferring funds through the FedNow Service [1]. Currently, the system’s architecture restricts transfers exclusively to two domestic banks [1]. By introducing intermediary capabilities, the central bank aims to foster private sector innovation, explicitly highlighting the potential for U.S. institutions to partner with correspondent banks to execute the international legs of cross-border payments [1].
The Modernization Imperative for Banks
The central bank’s push for interoperability arrives as traditional financial institutions face mounting pressure to modernize their payment architectures. Instant payments and e-money wallets captured 25% of global transaction volume in 2024, representing a substantial 92.308 percent increase from the previous 13% share [3]. Industry projections anticipate this figure will climb to 32% by 2029 [3]. Concurrently, Nacha anticipates an estimated 1.5 billion Same Day ACH payments will be processed in 2026 [alert! ‘this is a projected estimate that depends on final end-of-year data’] [3].
Compliance in a Real-Time World
As transaction speeds increase, so do the complexities surrounding Anti-Money Laundering (AML) and fraud prevention. The stakes were significantly raised in November 2025 when the Federal Reserve increased the FedNow transaction limit from $1 million to $10 million, effectively transforming the service into a corporate treasury rail [2]. This shift exposes financial institutions to institutional-scale transaction values, necessitating a complete reengineering of detection algorithms [2]. Relying on legacy technology is no longer viable, as traditional AML monitoring systems generate an estimated 95% false positive rate [2].
Bridging the Technological Divide
The burden of this transformation falls heavily on compliance teams, who must now review high-value, high-risk payments within severely compressed time windows, fundamentally redistributing the tradeoff between speed and control [2]. For smaller and mid-sized institutions, achieving operational scalability is a significant hurdle due to legacy system constraints and cost pressures [2]. These institutions increasingly rely on major core processors—such as Fiserv, FIS, and Jack Henry—to provide the necessary real-time monitoring capabilities and API-first frameworks [2][3].