Banking Associations Push Back Against 'Skinny' Payment Accounts Proposal

The Federal Reserve's proposal for 'Skinny' Payment Accounts has sparked a pushback from banking associations, which are seeking safeguards and limitations on the scope of these accounts.

The proposed structure allows access to certain payment systems while restricting overdrafts, interest, and overnight balances. This is aimed at catering to Tier 3 banks, which have historically struggled to obtain Master Accounts due to their lack of federal supervision or oversight from the Federal Reserve.

Two responses were recently submitted by banking associations, each with a different emphasis on safeguarding and limiting the scope of Payment Accounts. The groups are also pushing for the Fed to clarify its interpretation of which institutions are eligible for these accounts.