Fed Proposes Revisions to Payment System Risk and Account Access Guidelines

The Federal Reserve has proposed revisions to its policy on payment system risk and account access guidelines. The proposal aims to make it easier for eligible institutions to connect directly to Fed payment services without granting them full Master Account privileges.

Eligible institutions can apply for a special-purpose Payment Account, which would provide limited access to Fedwire Funds, FedNow, National Settlement Service, and Fedwire Securities. However, these accounts would not have intraday credit or discount-window access, nor would they earn interest on balances.

Banks are pushing the Fed to add more conditions for applicants, citing concerns about regulation and oversight. They recommend mandatory BSA/AML and sanctions requirements, as well as low initial limits on balances and the number of accounts. Some banks also want the Fed to explicitly state that a Payment Account is not a pathway to a Master Account.

The Financial Technology Association (FTA) supports the proposed framework but argues that excluding access to the Federal Reserve's Automated Clearing House (FedACH) network would limit its usefulness for many payment businesses. The FTA suggests alternatives such as enhanced prefunding and real-time balance verification, initially limiting participation to ACH credits.