Fed Revises Payment System Risk Guidelines
Published Date: 5/26/2026
Notice
Summary
The Federal Reserve is updating its rules to create special Payment Accounts for certain payment activities and changing how banks request access to these accounts and other services. Banks labeled as Tier 3 should hold off on new account requests while these updates are finalized. Comments on these changes are open until July 27, 2026, and the updates aim to make payment systems safer and smoother without extra costs for most users.
Analyzed Economic Effects
7 provisions identified: 1 benefits, 5 costs, 1 mixed.
Closing Balance Limit Up to $1 Billion
If you are an institution that would hold a Payment Account at a Reserve Bank, the Reserve Bank would set an individual Closing Balance Limit for your account measured at the Federal Reserve's daily close of business. The proposal says that limit would be set by the Reserve Bank based on your payment flows and would not exceed $1,000,000,000.
No Interest and No Reserve Credit
Balances held in a proposed Payment Account would not receive interest, and Payment Account holders would not have access to Reserve Bank credit such as intraday credit or the discount window. The RFI and proposal describe that Payment Accounts are designed without access to Reserve Bank credit.
Limited Services: Fedwire, FedNow, NSS Only
Payment Accounts would be limited to services that have automated controls to prevent overdrafts; the proposal contemplates access to the Fedwire Funds Service, the FedNow Service, and the National Settlement Service (NSS), and to the Fedwire Securities Service only for transfers free of payment. These services would be allowed specifically because automated reject controls exist to prevent negative balances.
No FedACH Access for Payment Accounts
The Board states that Payment Accounts would not be allowed access to the FedACH service because ACH's deferred settlement, returns, and reversals would create unmanageable credit risk for the Reserve Banks under the Payment Account terms. That means Payment Account holders could not originate or receive ACH activity through their Payment Account.
Prohibition on Correspondent Services
Payment Account holders would not be permitted to act as OC 1 Correspondents or OC 1 Respondents under Reserve Banks' Operating Circular 1; a Payment Account could not be used to settle a respondent institution's activity. The proposal explicitly prohibits Payment Accounts from providing correspondent banking services for others.
Tier 3 Account Requests: Pause Recommended
The Board is encouraging Reserve Banks to pause decisions on requests for Reserve Bank accounts and services from institutions that are Tier 3 under the Account Access Guidelines until the Board completes its policy development on Payment Accounts. Tier 3 institutions are typically non‑federally insured or not subject to federal prudential supervision.
Streamlined Review: 90-Day Target
The RFI proposed that a Reserve Bank generally would complete its review of a Payment Account request within 90 calendar days after receiving all requested documentation. The Board indicated that Payment Account requests would generally receive a more streamlined review than Master Account requests.
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Key Dates
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