Federal Reserve Governor Christopher J. Waller used the central bank’s inaugural Payments Innovation Conference on October 21 to propose a new “payment account,” a streamlined alternative to a traditional master account that would offer limited access to Federal Reserve payment services. In his remarks, Waller described a prototype that would give eligible institutions direct access to Fed rails while forgoing interest on balances, curbing account size through caps, and eliminating daylight overdrafts and discount window access. He framed the idea as a way to keep pace with private-sector innovation without expanding risk to the Reserve Banks. “Payments innovation moves fast, and the Federal Reserve needs to keep up,” he said.
For high-volume merchant acquirers, program managers, wallet providers, and bank partners that qualify as eligible institutions under federal law, this “skinny” master account could cut steps in the settlement chain, give firms finer control over intraday positions and cutoffs, and reduce counterparty and operational risk while improving reconciliation. Waller emphasized that eligibility would not expand; the account is meant for “legally eligible institutions,” not for non-banks that lack a qualifying charter.
What exactly would be on offer remains to be defined. Waller’s prototype sketches the risk posture but does not enumerate which services, such as Fedwire, FedACH, or FedNow, would be included.[1] He said staff would engage with stakeholders and pursue a streamlined review process, signaling a practical turn from the long-running stalemate over novel institutions’ access. Companies should expect a focus on prefunding mechanics, caps sized to daily throughput, and real-time controls to prevent overdrafts.
In his remarks, Governor Waller was clear that the “payment account” would be limited to “institutions that are legally eligible for an account,” targeted at payments innovators that today rely on bank relationships for indirect access to Fed accounts and services. The 2022 Account Access Guidelines would continue to govern review, and Reserve Banks would retain discretion; the proposal narrows services and risk but does not expand statutory eligibility. The proposed “payment account” narrows services and risk, but it does not change the statutory eligibility threshold or the discretion embedded in the 2022 framework.
For stablecoin and other digital-asset businesses that already operate through a bank charter or a state-chartered special-purpose bank, tighter linkage to Fed rails could strengthen the fiat leg of issuance and redemption. Faster settlement into and out of reserve accounts, fewer dependencies on correspondents, and more predictable intraday liquidity would all support operational integrity, especially if programs rely on rapid mint/redeem, merchant payouts, or corporate treasury flows. At the same time, the lack of interest in and the prohibition on daylight overdrafts point to a purely utilitarian account: it is about speed and control, not balance-sheet yield or credit.
Notably, if a company’s business involves accepting and transmitting funds or convertible virtual currency on behalf of others, state money-transmission licensing may still be an issue. While many state money-transmission laws exempt banks from licensing, recognizing that banks are already subject to extensive federal and state oversight, these exemptions are not uniform. Some states (e.g., California, Massachusetts) limit their “bank” exemption to institutions with FDIC insurance, which can create unexpected licensing obligations for certain state-chartered banks that do not have such insurance. In those jurisdictions, a state-chartered bank that is not FDIC-insured could be required to obtain a money-transmitter license for covered activities. At the same time, that same non-insured or limited-purpose state bank could still be legally eligible to apply for a Federal Reserve master account (including any future “payment account” version), because Section 19(b) of the Federal Reserve Act extends eligibility to banks that are eligible to apply for FDIC insurance, not only those that already hold it.
Georgia’s Merchant Acquirer Limited Purpose Bank charter illustrates how the charter strategy could intersect with Waller’s proposal. The MALPB was created to let entities engaged in merchant acquiring or settlement connect more directly to card networks under a limited-purpose state bank framework. MALPBs are tightly circumscribed, including limits on deposits and a focus on merchant settlement activity, features designed to address risk and to make the charter usable for payments businesses rather than for retail deposit-taking. Whether a MALPB would qualify depends on how its limited deposit authority is viewed under federal law. If a MALPB (or a similar limited-purpose charter) meets the Federal Reserve Act’s “depository institution” definition, it could be a candidate for a payment-only Fed account. Other novel charters could also benefit. Wyoming’s Special Purpose Depository Institution regime was designed to give digital-asset firms a state-bank path.
What should payments companies, processors, banks, and token-program sponsors do now? Waller signaled that staff will solicit stakeholder input. Thoughtful comments on which services can operate without overdraft exposure, how caps should scale with throughput, and other important questions will shape any eventual proposal, and stakeholders should pay close attention and consider participating in such requests.
If the Federal Reserve advances Waller’s prototype “payment accounts,” it could make Fed connectivity more attainable for legally eligible institutions that do not need or cannot secure a full master account, improving resilience and control for core settlement activities. It promises a more pragmatic dialogue with the Fed about access that aligns risk with utility, and that is a meaningful shift in the direction of modernizing U.S. payment infrastructure.