Federal Reserve Proposes Limited Access to Payment Systems for Non-Bank Institutions

The Federal Reserve has introduced a new concept for non-bank institutions to access its payment systems. A 'payment account' would allow eligible companies to send and receive payments through Fedwire and FedNow, but with restrictions designed to minimize risks.

These accounts, known as 'skinny master accounts', come loaded with limitations such as no interest paid on balances and stringent caps on overnight balances. They also do not grant access to the Fed's discount window or the automated clearinghouse system (ACH).

The proposal aims to give non-bank institutions a more direct route into the financial system, but critics argue that it may not be enough for fintechs and crypto companies. The debate has sparked intense lobbying efforts from both banks and non-bank firms.