A proposal from the Federal Reserve to grant limited payment account access to non-bank firms is dividing the financial industry. Fintech trade groups, led by the American Fintech Council, argue it would boost competition and innovation in payments. Traditional bank groups warn it could increase financial instability and specifically aid models like stablecoin issuance, which resemble deposit-taking without equivalent oversight.
Financial technology trade groups are urging the Federal Reserve to proceed with a plan for limited-purpose payment accounts for non-bank firms. They argue the current reliance on sponsor banks increases costs and slows settlement.
The proposal, outlined in a Request for Information, would allow eligible institutions to clear payments directly via Fedwire or FedNow without a full Master Account. American Fintech Council CEO Phil Goldfeder stated “A well-designed payment account can expand competition and responsible innovation in payments without introducing new risk.”
Bank trade groups, including the Bank Policy Institute and The Clearing House Association, strongly oppose the plan in a joint submission. They warn it represents a fundamental policy shift that could increase run risk by supporting deposit-like activity outside the federal safety net. They explicitly cited stablecoin issuers and crypto-linked institutions as likely beneficiaries.
The banks contend that even with balance caps and no lending authority, payment accounts could draw funds away from insured banks. They also raised concerns about compliance and operational risks if non-banks gain direct settlement access.
This debate revives long-standing disputes over access to the Fed’s core payment infrastructure. It follows legal setbacks for Custodia Bank, which has continued pressing for direct Fed access after courts upheld the central bank’s broad discretion.
The Fed has framed the payment account as an exploratory prototype. Its final decision could signal a redrawing of boundaries within the U.S. payments ecosystem.
