Fed wants comments on new payment account, ‘tailored’ to meet ‘limited needs’ of banks, credit unions

A new “payment account” — tailored to meet the limited needs of eligible financial institutions seeking payments and settling services – is being considered by the Federal Reserve, and the agency said Friday it wants comments on the idea.

In a press release, the Fed said financial institutions with new business models are seeking access to Federal Reserve payments services. “To support innovation and promote a safe and efficient payment system, the new payment account would be tailored to meet the limited needs of eligible financial institutions seeking payments and settling services,” the agency said. “This tailoring could result in lower risk to the payment system and, as a result, requests for payment accounts could generally receive a streamlined review.”

The agency made clear that the payment account would not be a Fed master account, used now by banks and credit unions to access payment services from the Fed. The agency said the payment account would pay interest, not have access to Fed credit, and would be subject to balance caps, among other features that separate it from a master account.

Additionally, the Fed said, a payment account would not expand or otherwise change legal eligibility for access to payments services from the Fed.

Comments will be due within 45 days of publication of the comment call’s publication in the Federal Register.

Federal Reserve Board requests public input on “payment account,” which eligible financial institutions could use for the limited purpose of clearing and settling their payments