The US Federal Reserve Board has proposed a new “payment account” that certain financial institutions could use solely for clearing and settling payments. This may appeal to Fintechs in the payments sector.
This would differ from a “master account,” which is what many regulated financial services firms currently use. A payment account would not pay interest, would not have access to Fed credit, and would be subject to balance caps, among other features that set it apart from a master account.
The Fed believes this may help boost innovation in the payments sector while making it easier for firms with new business models to access the system. At the same time, the Fed states that these new payment accounts could “result in lower risk to the payment system and, as a result, requests for payment accounts could generally receive a streamlined review.”
Fed Governor Christopher J. Waller said the request for information is a key first step in ensuring they are responsive to “evolutions in how payments are made.”
The “request for information” is available now for feedback from interested parties.