Fed Requests Comment on Payment Account Proposal
The Federal Reserve Board has requested public comment on a proposal to establish a “payment account” for legally eligible financial institutions to use specifically for clearing and settling payments. The proposal follows earlier public input and aims to serve financial institutions with diverse business models, including those not federally insured, that have sought direct access to the Federal Reserve’s payment services to reduce costs and increase speed. The payment account would be tailored to support innovation while mitigating material risks to Reserve Banks and the payment system. Key features include no access to intraday credit or the discount window, no interest on balances held at a Reserve Bank, and automated controls to prevent overdrafts. The proposal is substantially similar to a prototype outlined in a December 2025 request for information, with limited changes such as increasing the maximum closing balance based on expected payment activity. The Board also encourages Reserve Banks to temporarily pause decisions on Tier 3 access requests until the policy development process for the payment account is complete. The comment period will close 60 days after publication in the Federal Register.
What’s reported
The Federal Reserve Board proposed a “payment account” for legally eligible financial institutions to use for clearing and settling payments.
The proposal follows earlier public input from institutions with various business models, including those not federally insured.
Payment account holders would not have access to intraday credit or the discount window, would not earn interest, and would have automated overdraft controls.
The proposal does not expand or change legal eligibility for Federal Reserve accounts or payment services.
Limited changes from the December 2025 RFI include closing balance limits based on expected activity and an increased maximum closing balance.
The Board encourages a temporary pause on Tier 3 access requests until policy development is complete.
The comment period is 60 days after publication in the Federal Register.
Sources: federalreserve.gov
