Yesterday, U.S. Representatives Young Kim (R-CA) and Sam Liccardo (D-CA) introduced the Payments Access and Consumer Efficiency Act of 2026 (PACE Act). The bill would create an optional federal framework for large state‑regulated payment companies, giving qualifying firms Office of the Comptroller of the Currency (OCC) supervision and potential direct access to Federal Reserve payment rails, in exchange for bank‑like prudential and customer‑protection standards. It is an early‑stage proposal with uncertain prospects but significant implications for nonbank payments and bank–fintech partnerships.

Who Qualifies and What Registration Does

The Act would allow certain “covered providers” to become “registered covered providers” by applying to the OCC. Covered providers include firms that provide payment services and either hold at least 40 active state money transmitter licenses or operate under a state bank or credit union charter. The OCC must decide applications based on specified factors (including financial resources, Bank Secrecy Act (BSA)/anti-money laundering (AML) readiness, and public benefit) within fixed timelines, with “deemed approval” if it does not act in time. A registered provider that qualified via money transmitter licenses could operate its payment services nationwide.

Reserves, Segregation, and Customer Protection

Registered covered providers would be required to maintain 1:1 reserves backing outstanding payment obligations in highly liquid, low‑risk assets such as cash, Fed balances, insured deposits, short‑term Treasuries, and qualifying government money market funds, with limited rehypothecation. Providers offering custody or access services would have to segregate customer monetary value from their own assets and maintain detailed records of customer obligations and beneficial ownership. These standards are designed to reduce run risk and better protect customers in stress or failure scenarios.

Risk Management and “Fair Access”

The OCC would apply capital, liquidity, and risk‑management standards modeled on the federal stablecoin (GENIUS Act) regime, tailored to the provider’s business model. Registered providers would be subject to Equal Credit Opportunity Act (ECOA) as creditors and would also be prohibited from denying or canceling payment services based on customers’ constitutionally or statutorily protected beliefs, affiliations, or political views. Business decisions must be grounded in individualized, objective, risk‑based analysis rather than ideological considerations.

Supervision, Insolvency, and Fed Access

Registered covered providers would be examined by the OCC for safety and soundness, risk management, and compliance with federal consumer financial law, and critical third‑party service providers could themselves be supervised. Nonbank registered providers would be removed from the Bankruptcy Code and placed into a special resolution framework run by state regulators or the OCC, with customer payment obligations prioritized above general unsecured creditors and equity. Segregated custodial assets would sit outside the estate to the extent properly maintained. Separately, registered providers could request “payments reserve accounts” at the Federal Reserve, with access to Fedwire, FedNow, and FedACH, subject to statutory decision deadlines and emergency directive authority for the Fed.

Clarification Under Securities Laws and Next Steps

The bill would amend major federal securities statutes to specify that balances with registered covered providers are not “securities,” pushing those relationships firmly into the PACE/OCC framework rather than Securities and Exchange Commission and Securities Investor Protection Act regimes. As a proposed bill, the PACE Act will likely be revised through hearings and markups, and its ultimate passage is uncertain. Nevertheless, it signals congressional interest in a national, bank‑like framework for large nonbank payment firms and in clearer rules for their access to payment rails and customer funds.