Fedwire®, the first real-time payment, & FedNow® differences

The Fedwire transition to ISO 20022 requires an upgrade of an FI's technological infrastructure and an alignment of internal processes with new standards. Collaborating with the right technology partner can ease this transition. Banks and credit unions should seek out a provider partner who:

• Holds a certification for compliance with ISO 20022 messaging standards for Fedwire.
• Delivers a modern ISO 20022-native platform. This will allow that partner to provide APIs for FIs to integrate with customers’/members’ systems, enabling seamless Fedwire payments.
• Offers expert knowledge that extends beyond basic compliance and integration into strategic guidance on ways to capitalize on the potential of the new standard.
• Identifies future possibilities. For instance, as of November 2025, all SWIFT traffic for cross-border payments will transition to ISO 20022, marking a new era of global financial communication.

For insights into ways to strategically leverage Fedwire and ISO 20022, speak with one of our payment experts. 
 

Banks and credit unions who use Fedwire leverage it for:

• Sending and receiving payments for their own accounts 
• Sending and receiving payments on behalf of corporate or individual clients
• Settling commercial payments
• Settling positions with other financial institutions
• Settling clearing arrangements
• Submitting federal tax payments
• Buying and selling federal funds.

These translate to use cases like real estate transactions, large-dollar corporate payments, and emergency transfers of funds.

With Fedwire, banks and credit unions benefit from:

• ISO 20022 format — (As referenced above, as of March 10, 2025, all banks and credit unions will be required to comply with ISO 20022 for Fedwire payments.) This standard format facilitates the seamless transmission of crucial transaction information alongside payments. It can be used to send detailed data with the payment. It also will enable greater interoperability with global payments systems.
• Speed and certainty — Fedwire payments offer the speed and certainty customers/members demand for high-value, time-sensitive transactions. Settlement of funds also takes place in real time, so the credit is in the receiving account instantly. In addition, the payment is final and irrevocable.
• Reliability — Fedwire is subject to rigorous resiliency standards, including the hosting of out-of-region backup facilities; routine testing of business continuity procedures; and ongoing enhancements to recovery procedures.

In recent years, wire fraud, in the forms of account takeover and business email compromise, has skyrocketed, resulting in significant losses. Because these payments are real-time and irrevocable, banks and credit unions must have stringent verification protocols in place to ensure the validity of a transaction before it is sent.

Specifically, to mitigate fraud risk, FIs should introduce key features including:

• Transaction monitoring: A strong partner can help FIs automate and flag suspicions transactions, including those that are out-of-character for a customer/member or exceed certain dollar thresholds.
• User access controls: FIs should also introduce internal controls, including multi-factor authentication and role-based access, system-specific audit trails, and more.
• Dual control and segregation of duties: By separating out responsibilities, FIs can avoid inadvertent mistakes or fraudulent employee activity. Requiring two or more authorized personnel to approve any Fedwire transfer adds a layer of innate security.
• Automated fraud detection: Similar to transaction monitoring, today’s provider partners can offer advanced solutions featuring AI and ML fraud detection. These can detect and alert employees to potential fraud before money leaves the institution.
• Out-of-band verification: FIs also can require additional steps to release a wire payment. Manual intervention with callback confirmations can help ensure the transfer details are accurate and legitimate.

As with all fraud, the best defense is a good offense, and having protocols in place around Fedwire payments will help mitigate an FI’s risk of fraudulent wires leaving their institution.