Fed Seeks Ideas on New Payment Bank Account Prototype
Published Date: 12/23/2025
Notice
Summary
The Federal Reserve is asking for your thoughts on a new type of bank account designed just for payment-focused institutions to help them clear and settle payments safely and smoothly. If your institution can already open a Federal Reserve account, you can apply for this new Payment Account, which won’t change any legal rules but aims to reduce risks. Comments are open until February 6, 2026, so now’s the time to share your ideas!
Analyzed Economic Effects
9 provisions identified: 1 benefits, 5 costs, 3 mixed.
Overnight Balance Limit Rule
A Payment Account must be brought below a set overnight balance limit at the Reserve Bank close of business; during the business day balances can exceed the limit to fund payments. The Board is considering setting the overnight limit at the lesser of $500,000,000 or 10% of the account holder's total assets, and Reserve Banks could enforce the limit with counseling, penalty fees, or service restrictions.
No Discount Window Access
A Payment Account holder would not be eligible to borrow from the Federal Reserve's discount window. This exclusion is intended to reduce credit risk to the Reserve Banks.
No Intraday Credit / Daylight Overdrafts
Payment Account holders would not be permitted to incur intraday (daylight) overdrafts and payments that would cause an overdraft would be rejected; payments must be prefunded. The Fed defines its business day timing (generally ending at 7:00 p.m. ET) for these rules.
Who May Request a Payment Account
Any institution that already meets the legal eligibility rules for a Federal Reserve account may request a Payment Account. Generally an institution would be limited to maintaining one Reserve Bank account — either a Payment Account or a Master Account — and a Payment Account would not change legal eligibility rules.
No Interest on Overnight Balances
Balances held overnight in a Payment Account would not earn interest. This feature is intended to encourage account holders to limit overnight balances and use the account only to clear and settle payments.
Limited Permitted and Excluded Services
A Payment Account would permit settlement only for a limited set of services: the Fedwire Funds Service, the National Settlement Service, the FedNow Service, and Fedwire Securities Service free transfers. Services not available include FedACH, Check Services, FedCash, and Fedwire Securities Transfer Against Payment.
No Correspondent or Third-Party Settlements
A Payment Account could not be used to act as a correspondent bank or to settle transactions for respondent institutions, and Reserve Banks would not recognize third-party interests in Payment Accounts. Balances would be treated solely as obligations to the account holder.
Streamlined Application Review Timeline
Reserve Banks would generally be expected to complete review of a Payment Account request within 90 calendar days after receiving all requested documentation, though additional due diligence could extend that period in some cases. The Reserve Bank retains discretion to approve or deny the request.
Reserve Bank Discretion and Additional Controls
Reserve Banks would retain discretion to impose additional restrictions, risk controls, reporting, or attestation requirements on Payment Accounts on a case-by-case basis. The Board may also propose changes to existing guidance and Regulation D if it decides to offer Payment Accounts.
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