The Federal Reserve has launched a consultation on its proposed payment accounts, a “skinny” or cut down version of a master account for payment purposes, originally proposed by Governor Waller. The details are similar to the request for information in December 2025, with the main change relating to balance limits.
Payment accounts would have no access to intraday credit, credit from the discount window or any payment solutions that have credit capabilities such as FedACH. That means payment capabilities are limited to Fedwire, FedNow, National Settlement Service, and the Fedwire Securities Service. This mitigates credit risks and is one of the reasons why the application process could be faster at 90 days.
There are limits on the payment account balance based on payment activity, with an absolute upper limit of $1 billion, and no interest earned. Additionally, the bank cannot participate in correspondent payments that use another bank’s master account or allow the use of their own payment account by another institution.
The RFI proposed account balance caps of $500 million or 10% of the institution’s assets if lower. Apart from raising the maximum limit to $1 billion, the normal limit will be based on payments activity levels. The rationale is that institutions with small balance sheets could still process large volumes of payment transactions. According to the Fed, 97% of Master accounts keep balances under $1 billion. There will be flexibility for the Reserve Banks to increase the balance limits in unusual circumstances.
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