FedNow exclusively handles US-based transactions.The Future of Cross-Border Payments: FedNow, Ripple, and SPEI Explained

A fascinating development is unfolding between the United States and Mexico. The Federal Reserve's FedNow service began in 2023. It is now having a big impact outside the US, especially with Ripple's blockchain technology. I've studied this new partnership for months. Now, I notice a big change in how money moves across the US-Mexico border.

The New Financial Highway: Understanding FedNow and Ripple

FedNow marks the Federal Reserve's strong move into instant payments. It is a 24/7 real-time settlement system. This system is updating US banking for the digital era. Since its launch in July 2023, it has signed up over 900 financial institutions, showing remarkable adoption for such a young system. FedNow manages only US transfers. However, when paired with other technologies, it opens new doors for international payments.

This is where Ripple enters the picture as it is well-positioned to connect instant payment systems in various countries. Ripple Payments and XRP provide the tech needed to connect various national payment systems. This helps remove delays and costs tied to traditional banking.

What makes this partnership stand out is how well the two systems work together. FedNow is great at moving money quickly within the US, while Ripple excels at sending funds across international borders. By combining their strengths, they're creating a smooth payment corridor, especially for transactions between the US and Mexico.

The Hidden Mechanics: How FedNow, Ripple, and SPEI Work Together

Let's break down how this process actually works. When someone in the US wants to send money to Mexico, the payment first travels through FedNow's domestic rails. This happens almost instantly, with the money moving from the sender's bank to a financial institution that partners with Ripple.

From there, Ripple's technology—specifically its On-Demand Liquidity (ODL) service—takes over for the international leg of the journey. This is a crucial step where Ripple converts the dollars to XRP, then immediately converts that XRP to Mexican pesos. This conversion happens in seconds, not days, and avoids the need for pre-funded accounts that traditional cross-border payments require.

The last step happens when the pesos enter Mexico's instant payment system—SPEI. This system sends the funds to the recipient's Mexican bank account. The entire process, which once took days and incurred substantial fees, can now happen in minutes with much lower costs.

I find it fascinating how different financial technologies can come together. They create something more valuable than they could alone. Although FedNow wasn't originally designed for international payments, it can now handle them by connecting with Ripple. At the same time, Ripple benefits from FedNow's expanding network within the country.

The Financial Bridge: Why This Matters for US-Mexico Payments

The significance of this development becomes clear when you consider the scale of US-Mexico financial flows. In 2022 alone, remittances from the US to Mexico reached a staggering $60 billion, making it one of the most important remittance corridors in the world. Millions of families depend on these transfers, which traditionally have been burdened by high fees and slow processing times.

By creating a more efficient payment channel, the FedNow-Ripple-SPEI connection addresses several long-standing problems. First, it dramatically reduces the time money spends in transit. Instead of waiting 3-5 business days for international transfers to clear, recipients can access funds within minutes. For families depending on these remittances for daily needs, this time difference is meaningful.

Second, the cost savings are significant. With traditional cross-border payments, you typically face multiple fees, including sending fees, receiving fees, and the hidden costs of poor exchange rates. The Ripple-enabled pathway reduces these costs substantially, ensuring that more money reaches its intended recipients.

Third, this system is available 24/7. Unlike traditional banking methods that only process during business hours, the FedNow-Ripple-SPEI corridor operates around the clock, including weekends and holidays. This always-available access marks a fundamental shift in how we think about international money movement.

I think what's truly exciting here is that we're seeing the beginning of a new financial infrastructure that could eventually expand to other countries and regions. The US-Mexico corridor is just the first implementation of what could become a global network of interconnected instant payment systems.

Beyond the Obvious: Unexpected Benefits and Challenges

One unexpected aspect of this arrangement is how Ripple is involved indirectly through strategic partnerships. Companies like Volante Technologies, which has partnered with Ripple since 2015, joined FedNow's pilot program in 2021. This suggests that Ripple's technology is helping to power the ecosystem without requiring direct integration, further strengthening its position in cross-border payments.

Ripple's indirect involvement shows its plan to integrate into the new financial system. Instead of competing with central bank programs like FedNow, Ripple offers a complementary service. It helps expand the reach of these systems across borders.

That being said, this arrangement isn't without challenges. There's ongoing debate about direct FedNow cross-border capabilities. As of March 2025, FedNow still only supports domestic payments, as confirmed by the Federal Reserve's own documentation.

Federal Reserve officials have shown interest in making future cross-border payments better. In March 2023, Nick Stanescu said that "FedNow officials are looking ahead to see how this can help with instant payments, not just in the US, but also for cross-border uses." However, some officials, like Governor Christopher Waller, are being cautious about connecting systems quickly, citing concerns about fraud and money laundering.

The Bank for International Settlements (BIS) has highlighted the potential benefits, noting in October 2024 that "linking Mexico's SPEI to the Federal Reserve's FedNow could lower the cost of cross-border payments." This indicates a future vision, but for now, the implementation relies on intermediaries like Ripple.

If the Federal Reserve develops direct cross-border capabilities for FedNow in the future, it may compete with Ripple's services. For now, FedNow's domestic efficiency enhances Ripple's position, likely boosting its adoption and use.

Adoption Trajectory: What Banks and Users Are Experiencing

The adoption of this new payment corridor is still in its early stages, but the signs are promising. FedNow had signed up over 900 financial institutions by July 2024, creating a substantial network effect that benefits any cross-border solution that integrates with it. As more US banks join FedNow, more potential partners become available for Ripple's international services.

From the user perspective, the experience is dramatically improved. Imagine sending money to family in Mexico and having them receive it within minutes, instead of days. This kind of experience drives adoption through word of mouth, as users naturally prefer faster, cheaper services.

Financial institutions also have strong incentives to adopt these technologies. Banks that offer faster remittance services can attract more customers, particularly in communities with strong ties to Mexico. They can also reduce their operational costs associated with managing international transfers, creating a win-win situation.

Ripple's 2024 "Trends in Regional Payments" document suggests that FedNow's network effects will boost XRP adoption, potentially disrupting traditional international payment systems like SWIFT and increasing RippleNet usage. This is particularly promising for high-volume corridors like US-Mexico.

Comparing Technologies: FedNow vs. Ripple

To understand the complementary nature of these technologies, let's compare their key attributes:

FedNow focuses exclusively on domestic US payments, providing 24/7 instant settlement between American financial institutions. It's built on the Federal Reserve's own infrastructure and can process domestic transfers in seconds. However, it currently has no direct support for cross-border payments, though there's potential for this in the future.

Ripple, meanwhile, specializes in cross-border payments with global reach. It uses blockchain technology with XRP as a bridge currency and can typically complete international transfers in 3-5 seconds. This makes it significantly faster than traditional SWIFT transfers, which can take days.

When these systems work together in the US-Mexico corridor, the process follows these steps:

1. A domestic transfer in the US using FedNow delivers funds instantly to a Ripple partner, operating 24/7.
2. The cross-border transfer then happens via RippleNet's On-Demand Liquidity service, using XRP as a bridge currency for fast, low-cost conversion.
3. Finally, the local deposit in Mexico occurs through SPEI, allowing for instant settlement in Mexican pesos.

This three-step process creates a seamless experience for users while leveraging the strengths of each individual system.

Future Implications: Where This Partnership Could Lead

The implications of this development extend far beyond just making remittances easier. We're witnessing the early stages of a new financial architecture that could fundamentally change how money moves around the world.

For Ripple specifically, its role in bridging domestic instant payment systems could significantly increase adoption of its technology and the use of XRP. As more countries develop their own instant payment systems like FedNow and SPEI, Ripple can position itself as the connector between these national networks.

For banks and financial institutions, this represents an opportunity to offer better services to customers while reducing operational costs. Those that adapt quickly to these new payment rails could gain significant competitive advantages in the cross-border payment market. Our team at Digital Ascension Group works with experts worldwide to help clients access all the benefits of this new system.

For central banks and regulators, the FedNow-Ripple-SPEI connection provides a model for how domestic instant payment systems can connect internationally while still maintaining appropriate regulatory oversight. This could influence how other central banks approach the development of their own instant payment systems.

In the longer term, this kind of integration could lead to a more interconnected global financial system where sending money internationally becomes as easy, fast, and cheap as domestic transfers. This would represent a major step forward in financial inclusion and economic efficiency.

The Road Ahead: What to Watch For

As this payment corridor continues to develop, there are several key factors to watch. First, any announcements from the Federal Reserve about direct cross-border capabilities for FedNow could impact Ripple's role in this arrangement. If FedNow eventually connects directly with systems like SPEI, it could potentially reduce the need for intermediaries.

Second, regulatory developments will be crucial. The cross-border payment space is heavily regulated, and changes in regulatory approaches could either accelerate or hinder the growth of this payment corridor. Ripple's own regulatory challenges, particularly in the US, could also impact its role in this system.

Third, adoption metrics will tell us whether this new payment rail is gaining traction. Increasing transaction volumes through this corridor would indicate that the market sees value in this arrangement.

A New Chapter in International Finance

What we're seeing with the FedNow-Ripple-SPEI connection is nothing less than the beginning of a new chapter in international finance. The traditional system of correspondent banking and SWIFT messages is gradually being supplemented—and perhaps eventually replaced—by faster, more efficient payment rails built on new technologies.

The complementary nature of FedNow's domestic focus and Ripple's cross-border expertise creates a synergistic flow that benefits all participants. For Ripple specifically, this arrangement enhances its market position and provides a model for similar integrations in other countries and regions.

For users sending money between the US and Mexico, the benefits are immediate and tangible: faster transfers, lower costs, and greater convenience. As this system continues to evolve and expand, it could transform not just the US-Mexico corridor but potentially the entire landscape of global payments.

The FedNow-Ripple-SPEI connection stands out as an innovation with immediate, practical benefits for millions of people. It's a reminder that financial technology, at its best, should make life easier and more affordable for the people who use it.