On December 16, the Federal Reserve Board issued a Request for Information on a new special‑purpose “Payment Account” prototype, which is essentially a stripped‑down Federal Reserve Bank account designed for institutions focused on payments innovation. The goal with this specialized or “skinny” access is to give legally eligible, payments‑centric institutions a more predictable and lower‑risk path to access key Federal Reserve payment services, without changing who is legally eligible for Federal Reserve master accounts.

The Payment Account

A Payment Account would be separate from a traditional master account and used solely to clear and settle the account holder’s own payment activity. It would be subject to tight structural limits: capped overnight balances (the Fed is considering the lesser of $500 million or 10% of total assets), no interest on overnight balances, no discount window access, and no intraday credit, meaning any transaction that would create an overdraft would be automatically rejected. The account could be used to settle Fedwire Funds, FedNow, the National Settlement Service, and free‑of‑payment Fedwire Securities transfers, but not ACH, check, FedCash, or delivery‑versus‑payment securities transfers. Payment Account holders also could not act as correspondents or settle for other institutions.

Eligibility, Review, and Risk Controls

Any depository institution that is already legally eligible for a Federal Reserve account could request a Payment Account, but, in general, an institution would be expected to choose either a Payment Account or a traditional master account, not both. Requests would still be evaluated by the local Reserve Bank under the existing risk‑based Account Access Guidelines, but the Fed expects a more streamlined process: once all documentation is received, Reserve Banks would generally aim to complete reviews within 90 calendar days, with limited extensions where extra due diligence is required. The Fed is also considering additional conditions via account agreements, attestations, consent to reviews, and reporting, especially around operational resilience, cybersecurity, and AML/BSA/CFT compliance.

Why It Matters

For payments‑focused institutions — including some fintechs and special‑purpose banks that are legally eligible but have faced long, uncertain master account reviews — the Payment Account could provide a practical, albeit constrained, way to gain direct access to some Federal Reserve payment rails while reducing reliance on correspondent banks. At the same time, the inability of a Payment Account holder to process ACH transactions and the Payment Account’s tight limits on balances, services, credit, and correspondent activity mean it is not a full substitute for a traditional master account, but rather a narrowly tailored access model aimed at limiting risks to the Reserve Banks, the payment system, and monetary policy.

Next Steps

Federal Reserve Governor Christopher Wallen previously stated the goal was to have the accounts “up and operationalized by the fourth quarter of 2026,” but this aggressive timeline is not going to be met. Instead, comments on the Payment Account prototype are due 45 days after publication in the Federal Register. The Board specifically seeks input on whether the Payment Account’s design meets real‑world payments needs, which use cases it best supports, how it affects risk (including AML/BSA/CFT risk), and whether the proposed balance caps, service set, and no‑interest/no‑credit structure are appropriate.