Fed Proposes Guidelines for Payments System Access

In a significant move today, the Federal Reserve proposed new guidelines that it will use when evaluating requests for master accounts with the Fed or access to the agency’s financial services. The proposal comes amid growing requests from fintech firms and other providers to gain access to the payments system. Comments on the proposal are due 60 days after publication in the Federal Register.

Under the proposed guidelines, the Fed will consider:

  • Whether the institution is legally eligible to maintain an account at a Federal Reserve Bank and has a “well-founded, clear, transparent and enforceable legal basis for its operations.”
  • Whether the provision of an account and services would present or create undue credit, operational, settlement, cyber or other risks to the Reserve Bank, or to the broader payments system.
  • Whether the provision of an account and services would create undue risk to U.S. financial stability.
  • Whether the provision of an account and services would create undue risk to the economy by facilitating illicit activities.

In the event the Fed decides to grant an access request, “it may impose (at the time of account opening, granting access to service, or any time thereafter) obligations relating to, or conditions or limitations on, use of the account or services as necessary to limit operational, credit, legal, or other risks posed to the Reserve Banks, the payment system, financial stability or the implementation of monetary policy or to address other considerations,” according to the proposal.

The American Bankers Association, which had previously called for the Fed to establish a set of standards in an op-ed earlier this year, welcomed today’s action.

“The Fed’s payments system has long been a fortress of safety and efficiency that has benefited millions of consumers, businesses, and the broader economy,” said ABA President and CEO Rob Nichols. “To access the system today, banks must meet the highest regulatory standards and face rigorous overnight. We embrace innovation and new business models, but we believe every entity seeking similar access to the Fed’s payments system, including those with novel charters, should meet those same high standards. To do otherwise would put consumers and the financial system at risk.”