Fed Seeks Comment on Fintech Payment Infrastructure Access

The Federal Reserve announced Wednesday night that it is seeking public comment on a proposal to extend limited access to its payment infrastructure to fintech and other non-bank firms. The proposal follows an executive order signed by President Trump this week directing federal financial regulators to strip away barriers blocking fintech firms from the financial system and specifically requesting the Fed to evaluate and expand access to its payment accounts. The Fed's payment system is the backbone of how money moves through the U.S. financial system, and decisions about who gains access will shape competition between traditional banks and fintech companies.

The Fed had initiated this process late last year with a request for information on payment system access.

Proposed Access Limitations

The Fed's proposed payment account would offer more limited access than accounts available to traditional banks. Non-bank entities would not have access to the discount window and would be unable to access intraday credit.

Regulatory Concerns

Fed governor Michael Barr dissented from the proposal, warning that extending access to institutions "we do not supervise" without examination authority over their anti-money-laundering compliance leaves the financial system open to risk.

Fed governor Lisa Cook said she supported sending the proposal out for public comment but noted the importance of soliciting public input on the risks of granting clearing capabilities to firms outside comprehensive federal oversight.