The Federal Reserve’s proposed new Payment Account will have more limited features than a traditional master account, but it has significant implications for the financial industry. As our new three-part article series explores, institutions hoping to request direct access under the proposal face significant scrutiny of their capabilities – and banks presently acting as payment intermediaries need to assess the risk to their revenue streams and market positioning.
The Fed’s proposal for a Payment Account prototype would give eligible financial institutions a streamlined route to gain direct access to the Fed’s payment services, for the limited purpose of clearing and settling their payments. The proposal, while not yet a settled policy, signals a paradigm shift in managing access to core settlement infrastructure.
Chartered non-bank payment firms seeking access will find that the price of entry is greater risk discipline and robust capabilities in areas such as liquidity management and transaction monitoring. Meanwhile, sponsor banks that act as settlement intermediaries today face the threat of revenue disruption as relationships are weakened – not only in settlement but across a range of related services.
Our three-part series explores:
The three parts of the series can be found below. Read on to understand the likely changes and their strategic implications.
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