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A coalition of fintech trade groups is lobbying for the Federal Reserve to move forward with the Payment Account prototype that would open up direct payments access for eligible non-bank financial firms.<\/p>\n
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Led by the American Fintech Council, a group of fintech trade associations has submitted a comment letter to the Federal Reserve, where it urged the central bank to move forward with plans for granting direct access to its payment systems for eligible non-bank financial institutions.<\/p>\n
\u201cA well-designed Payment Account can expand competition and responsible innovation in payments without introducing new risk or undermining the Federal Reserve\u2019s longstanding prudential safeguards,\u201d American Fintech Council CEO Phil Goldfeder said in a Monday statement.<\/p>\n
Payment Accounts are the Federal Reserve\u2019s proposed answer to long-standing calls for access to its payments infrastructure by offering limited settlement capabilities without having to extend full banking privileges.<\/p>\n
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Late last year, the central bank opened up the possibility of limited direct access to its payment systems after a prolonged standoff. Governor Christopher Waller proposed a \u201cskinny\u201d master account model, but with limitations such as balance caps, no interest, and restricted use of final-settlement systems such as Fedwire.<\/p>\n
According to the coalition, allowing Payment Accounts would reduce operational friction in the current system, which typically involves relying on sponsor banks for access to core infrastructure, an arrangement that tends to increase costs, introduce counterparty risk, and limit competition.<\/p>\n