Late yesterday, the Federal Reserve Board requested public comment on a proposal to establish a form of special-purpose payment account for the purpose of clearing and settling the accountholder’s payment activity.[1] The Federal Reserve Board proposes to implement this account type through (i) amendments to the Account Access Guidelines finalized in 2022, which established a three-tier framework for Federal Reserve Banks to use in evaluating requests to access Federal Reserve Bank accounts and payment services;[2] (ii) amendments to the Federal Reserve Board’s Policy on Payment System Risk to implement certain terms and controls applicable to payment accounts; (iii) amendments to the Federal Reserve Board’s Regulation D to specify that interest would not be paid on payment account balances; and (iv) amendments to the Federal Reserve Board’s Regulation A to provide that payment accountholders would not be eligible to borrow from the discount window.
The Federal Reserve Board also expressly stated that it “encourages Reserve Banks to pause decisions on access requests from Tier 3 institutions until the Board has completed its policy development process on the Payment Account proposal.” The Federal Reserve Board “currently expects the pause to end on or before December 31, 2026.” The Federal Reserve Board notes that there may be “cases where extraordinary or unusual circumstances exist that support a Reserve Bank making a decision before the Board has completed its policy development process”; in such cases, “the Board requests that the Reserve Bank consult with the Board.”[3]
The Federal Reserve Board’s proposal to establish a new type of payment account follows its December 2025 request for public input and comment on a prototype payment account that would be tailored to the needs and risks of institutions focused on payments innovation, and would be available to legally eligible institutions without a full-service Federal Reserve Bank master account.[4] The proposal also follows the approval by the Federal Reserve Bank of Kansas City in March 2026 of a limited purpose account for Kraken Financial, which had restrictions and controls similar to those contemplated by the December 2025 release.[5] Finally, the proposal follows the recent executive order requesting that the Federal Reserve Board conduct a comprehensive evaluation of the “legal, regulatory, and policy framework governing access to Federal Reserve Bank payment accounts and payment services by uninsured depository institutions and non-bank financial companies.”[6]
The characteristics of the proposed payment account largely reflect what the Federal Reserve Board described in its December 2025 release. The account would be limited to clearing and settling the accountholder’s payment activity and would be subject to an overnight balance limit. The accountholder would not have access to discount window credit or intraday credit, and could access only Federal Reserve Bank services that can automatically reject transactions that would cause an overdraft.[7] The accountholder also would not receive interest on balances held in the account.
The proposal, however, includes some differences from the December 2025 release. The December release had contemplated that a payment account would be subject to an overnight balance limit of the lesser of $500 million or 10 percent of the accountholder’s total assets; under the proposal, a Federal Reserve Bank would calibrate the overnight balance limit based on the payment accountholder’s payment activity, subject to a $1 billion maximum. The December release indicated that the Federal Reserve Board was exploring additional risk controls for payment accounts, including to cover risks associated with illicit finance. The newly released proposal would provide that a Federal Reserve Bank may require a payment accountholder to provide information to demonstrate compliance with Bank Secrecy Act/anti-money laundering and sanctions requirements.
Finally, the proposal would specify that a request for a payment account from a Tier 2 or Tier 3 institution would generally receive a “more streamlined” review relative to a request for a master account from the same institution. The proposal would also establish an expectation that a Federal Reserve Bank’s review of a request for a payment account will generally be completed within 90 calendar days of receiving all requested documentation. For a Tier 1 institution, the proposal would establish an expectation that any account request, whether for a master account or payment account, will be completed within 45 calendar days of receiving all requested documentation.
Comments on the proposal will be due 60 days after each notice included in the proposal is published in the Federal Register.
[2] For more information on the Guidelines, please refer to our Memorandum to Clients, published on August 19, 2022. The three tiers are: (i) Tier 1—legally eligible institutions that are federally insured; (ii) Tier 2—legally eligible institutions that are not federally insured but are subject by statute to prudential supervision by a federal banking agency and have a holding company subject to Federal Reserve oversight (for a state-chartered institution, the holding company requirement applies only if it has a holding company); and (iii) Tier 3—all other legally eligible institutions. Under the Guidelines, Tier 1 institutions are generally subject to a less intensive and more streamlined review when requesting Federal Reserve Bank accounts or services, Tier 2 institutions to an intermediate level of review and Tier 3 institutions to the strictest level of review.
[4] For details on the Federal Reserve Board’s request for information, please refer to our Memorandum to Clients, published on December 19, 2025.
[7] According to the proposal, the services that would be available to holders of payment accounts would be limited to the Fedwire® Funds Service, the FedNow® Service, the National Settlement Service and the Fedwire Securities Services (for securities transfers free of payment), and would not include FedACH®.