Banking and Finance Law Daily Wrap Up, CHECKS AND ELECTRONIC TRANSFERS—Stakeholders vary on Fed’s payment account proposal, (Feb 10, 2026)

By Suzanne Cosgrove

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.

Responding to a Federal Reserve Board request for comment, the American Bankers Association (ABA) and several other banking industry groups urged the Federal Reserve to take a cautious approach to its proposed creation of special-purpose accounts, while others supported the proposal.

The payment accounts would expand access for eligible financial institutions who would use the accounts for clearing and settling payments and would be distinct from a master account, which financial institutions currently use to access payments services from the Fed.

It its comment letter, the ABA asked the Fed to carefully weigh the protection of the integrity and resilience of the U.S. payments system as it takes steps to broaden access to its services.

“Because the proposal concerns nascent access models and may extend limited Federal Reserve account services to entities with varying supervisory profiles and emerging business models, careful design and robust risk mitigants are essential to uphold the integrity of the payments system and to protect the public interest,” the ABA said.

ABA’s proposals. The group made several specific recommendations for the Fed’s consideration:

• Direct federal supervision of Payment Account holders for BSA/AML/CFT, sanctions, operational, and cybersecurity compliance;

• No correspondent or “nesting” arrangements to prevent indirect or unauthorized access to the payment system by third parties;

• Low transaction limits that could only expand after strong and consistent performance, following a phased “crawl, walk, run” approach; and

• Financial assurances, such as surety bonds sized to the applicant’s activity and risk.

The ABA also highlighted the importance of preserving a separate and distinct application process for Master Accounts, emphasizing that “the process to obtain a Master Account should remain rigorous and must remain separate from the Payment Account application process.”

A view toward expansion. As reported last week (see Banking and Finance Law Daily, Feb. 6, 2026), the Financial Technology Association (FTA) previously weighed in on the other side of the argument, by urging the Fed to modify its Reserve Bank Payment Account Prototype to expand—rather than limit—access to core payment rails for payments-focused firms.

FTA also stated that the proposed Payment Account, also referred to as a “skinny Master Account,” should include access to FedACH in addition to the services identified in the proposal.

The Conference of State Bank Supervisors (CSBS) also supported the proposal for expanded services. In its comment letter, CSBS said eligible institutions requesting access to payment accounts should be subject to a more streamlined risk assessment and review process given the proposed limitations and risk-mitigating features, “including restrictions on discount window borrowing and overdrafts.”

“The streamlined process would represent a marked improvement over the Federal Reserve's current opaque, lengthy, and open-ended review process for Tier 3 institutions,” the group said.

Why act? A Fed staff memo issued in December 2025 indicated that it began to consider the new accounts following its August 2022 adoption of Account Access Guidelines and the evolution of the business models of institutions—including crypto firms—submitting access requests to Reserve Banks over the past three years (see Banking and Finance Law Daily, Dec. 19, 2025).

As noted in the Fed memo, the business models of institutions submitting access requests to Reserve Banks continued to evolve in the intervening three years. For example, eligible institutions expressed interest in access to accounts and services to reduce costs to their customers while improving payment processing speed, often through new technologies.

A suggestion to rescind. Meanwhile, the nonprofit think tank Better Markets suggested in its comment that the Fed should rescind this proposal altogether “and renew its commitment to supporting our banking system and the American economy.”

The proposed introduction of special purpose payment accounts is “a clear giveaway to the crypto industry,” Better Markets said. “More business for crypto means less bank deposits, less bank lending, and less support for the real economy,” it stated in a release.

Acknowledging the Fed’s proposal would likely go forward regardless, Better Markets suggested two modifications to the proposal that it said would enhance risk management:

• The framework must limit applications granted and provide strict limits to transaction volume until the full scope of risks has been fully determined.

• Any institutions provided Payment Accounts must be subject to materially similar risk management and application standards as insured depository institutions.

Companies: American Banking Association; Better Markets; Conference of State Bank Supervisors; Financial Technology Association

RegulatoryActivity: BankingOperations BankSecrecyAct ChecksElectronicTransfers FederalReserveSystem FinancialIntermediaries FinTech Blockchain