Fed Payment Accounts Need Strong Guardrails to Protect Financial System
Washington, D.C. – The Federal Reserve must require strong safeguards for newly proposed payment accounts to protect the U.S. financial system, the Bank Policy Institute, Financial Services Forum and The Clearing House Association said in a comment letter today. The accounts, proposed by the Fed in May, would give unprecedented direct access to Federal Reserve payment rails to firms without the full range of bank protections, including deposit insurance and BSA/AML supervision by a federal banking agency. To keep the system safe, the Fed should apply rigorous standards to every firm seeking access to its payment rails, the trades emphasized.
“The question of who can access the federal payment rails is critically important. Giving such access to firms without deposit insurance, supervision by a federal banking regulator for AML/CFT obligations or other banking protections could expose the financial system to significant risk. The Federal Reserve should therefore proceed cautiously when considering whether such firms should have access to any type of Reserve Bank account, including a payment account.” – BPI, FSF and The Clearing House Association
Background. The Federal Reserve opened the rulemaking process in December 2025 with a request for information on payment accounts, followed in May 2026 by a proposed framework for such accounts. The Fed proposed various restrictions on such accounts, which would be available to “eligible institutions,” some of which may lack deposit insurance, consolidated holding-company supervision or other features of fully regulated banks. This effort comes amid several years of policy and legal debate about which institutions should be allowed to have direct access to a master account.
Mitigating Risk. The Fed proposed limits on payment account holders to mitigate risks to the Reserve Banks, other payment system participants, and the U.S. payment and financial systems. The trades support these limits, which include:
- Limits on access to FedACH, FedCash services and Fed check services.
- No interest paid on payment accounts.
- No access to the Fed’s discount window.
- Overnight balance limits.
- Prohibition on payment accounts being used to benefit third parties.
The trades also recommend further safeguards:
- Require payment account applicants to maintain the same BSA/AML and sanctions risk standards as insured banks.
- Lower the proposed overnight balance limit to control the size of the Federal Reserve balance sheet.
- Subject payment account holders to examination and enforcement by a federal banking supervisor for BSA/AML.
- Require payment account holders to mitigate cyber and operational risk and to establish measures to enable their orderly resolution.
High-Level Recommendations. More broadly, the trades urged the Federal Reserve to:
- Consider the systemic impact on the payment system, monetary policy and financial stability of offering payment accounts.
- Ensure its standards for payment account access are applied consistently and transparently across Reserve Banks.
- Release payment account requests for public comment.
- Publish its interpretation of “legal eligibility” for a Reserve Bank account.
- Allow uninsured depository institutions that are not subject to full, comprehensive federal supervision to seek access only to payment accounts and not full master accounts.
Bottom Line. The Fed’s proposed limitations on payment accounts are a sensible starting point to protect the integrity of the payments system. Building on these restrictions by applying the recommendations outlined above would make the system safer.
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About Bank Policy Institute
The Bank Policy Institute is a nonpartisan public policy, research and advocacy group that represents universal banks, regional banks and the major foreign banks doing business in the United States. The Institute produces academic research and analysis on regulatory and monetary policy topics, analyzes and comments on proposed regulations, and represents the financial services industry with respect to cybersecurity, fraud and other information security issues.
About Financial Services Forum
The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
About The Clearing House Association
The Clearing House Association L.L.C., the country’s oldest banking trade association, is a nonpartisan organization that provides informed advocacy and thought leadership on critical payments-related issues. Its sister company, The Clearing House Payments Company L.L.C., owns and operates core payments system infrastructure in the U.S., clearing and settling more than $2 trillion each day.
Media Contact
Tara Payne
Bank Policy Institute
tara.payne@bpi.com
Sarah Knakmuhs
Financial Services Forum
sknakmuhs@fsforum.com
Greg MacSweeney
The Clearing House Association
gregory.macsweeney@theclearinghouse.org