Banking and Finance Law Daily Wrap Up, CHECKS AND ELECTRONIC TRANSFERS—Banking trades raise concerns with Fed’s payment account proposal, (Feb 11, 2026)

By Jonathan Anderson

The Fed’s RFI sought input on a special-purpose Reserve Bank account prototype that would provide eligible institutions with new access to accounts and services.

The Bank Policy Institute, Financial Services Forum, and The Clearing House Association filed comments in response to a Request for Information (RFI) from the Federal Reserve System about its proposed creation of a special-purpose account prototype (Payment Account). The trade associations, which represent banks and other financial institutions, raised concerns about the potential systemic risks of the proposal and its impact on financial stability. The comment letter also recommended that the Federal Reserve impose certain requirements on applicants, such as a demonstrated record of safe and sound operations and strict balance and transition limits, and that applications for such accounts be published for public comment.

Background. The RFI issued Dec. 23, 2025, sought public comment about the Federal Reserve’s proposed creation of a special-purpose account prototype. According to the RFI, a Payment Account holder would be expected to use its account for clearing and settling the institution’s payment activity. Any institution that is eligible for Federal Reserve accounts or services under the Federal Reserve Act would be eligible to request a Payment Account from a Reserve Bank. The Payment Account protype would not expand or otherwise change legal eligibility for access to accounts and services.

Systemic impact, financial stability. First, the letter urged consideration of the systemic impact of the proposal on the payment system and financial stability. The proposal, the organizations said, “represents a fundamental shift in policy in favor of enabling an increased number of uninsured institutions in the United States to conduct payment activity directly through Reserve Bank accounts while engaging in activity that constitutes or, in many ways, resembles deposit-taking.” The letter cautioned that uninsured institutions may be able to increase their customer base, which would increase the number of consumer accounts at such institutions.

Request evaluation. Second, the letter argued that reserve banks should continue to evaluate account or service requests under the Board’s Guidelines for Evaluating Account and Services Requests (Guidelines). The letter called for public comment on any changes to the Guidelines to address Reserve Bank evaluation of Payment Account requests. Further, the letter recommend that key features of the Payment Account related to the discount window and interest on account balances be codified in regulation.

Access only to Payment Accounts. Third, the letter argued that uninsured depository institutions not subject to federal supervision at both the institution and holding company level should be permitted to seek access only to Payment Accounts. The letter proposed limiting access to a Master Account only to entities that qualify under the Guidelines as Tier 1 or Tier 2 institutions. Requests for Master Accounts by Tier 2 institutions that do not have demonstrated experience managing the risks presented by their business models and that are not subject to a supervisory framework equivalent to Tier 1 institution should receive additional scrutiny. Tier 3 institutions should only be able to seek access to a Payment Account.

Risk-based approach. Fourth, the letter argued that the Reserve Banks should take a deliberate, risk-based approach in considering whether to grant Payment Accounts to institutions that are not federally insured and not otherwise subject to federal prudential oversight. Payment Account requests should be published for public comment by the Reserve Banks and included in the Board’s Account Access Database. In addition, the Federal Reserve should publicly release a summary of how it analyzed the risks of any approved Payment Account request under the Guidelines, including any specific conditions or restrictions imposed and any commitments entered into by the applicant.

Limitations on payment accounts. Fifth, the organizations expressed support for limitations on Payment Accounts contemplated in the RFI. The letter argued that Payment Accounts should be subject to overnight balance limits, and that daily maximum transaction limits should also be considered. Payment Account holders should have access only to payment systems that provide final, irrevocable settlement and are subject to real-time monitoring. Further, the letter argued that interest should not be paid on balances in Payment Accounts, and that Payment Accounts should not be used to benefit third parties.

Additional risk controls. Sixth, the letter suggested the Federal Reserve establish additional risk controls and conditions for Payment Accounts. For example, the letter expressed support for controls and oversight to mitigate BSA/AML and economic sanctions risks. The letter also proposed notification requirements for risk issues such as cybersecurity breaches.

Previous comments. The Financial Technology Association previously urged the Fed to modify its proposal to expand access to core payment rails for payments-focused firms while other stakeholders (see Banking and Finance Law Daily, Feb. 6, 2026). Meanwhile, the American Bankers Association and several other banking industry groups urged the Fed to take a cautious approach to its proposed creation of special-purpose accounts, while other organizations supported the proposal (see Banking and Finance Law Daily, Feb. 10, 2026).

Companies: American Banking Association; Bank Policy Institute; Better Markets; Conference of State Bank Supervisors; Financial Services Forum; Financial Technology Association; The Clearing House Association

RegulatoryActivity: BankingOperations BankSecrecyAct ChecksElectronicTransfers FederalReserveSystem FinancialIntermediaries FinTech