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Fed Considers Proposal To Allow FinTechs Access To Payment System

The Federal Reserve Board has invited comment from the public on proposed guidelines to evaluate requests for accounts and payment services at Federal Reserve banks, a press release said Wednesday (May 5).

In the past few years, new financial products and delivery mechanisms have been introduced that work with traditional banking services.

Many institutions, notably, have leveraged emerging technologies, including from institutions working with new types of bank charters designed to support such innovation.

To make that happen, institutions have sometimes requested access to the payment system offered by Federal Reserve Banks. To help facilitate those requests along with considering ramifications of the broader system, the Federal Reserve Board wants to add new account access guidelines.

The guidelines will take into account the Board’s legal authority and reflect on an analysis of its policy goals.

“With technology driving rapid change in the payments landscape, the proposed Account Access Guidelines would ensure requests for access to the Federal Reserve payments system from novel institutions are evaluated in a consistent and transparent manner that promotes a safe, efficient, inclusive, and innovative payment system, consumer protection, and the safety and soundness of the banking system,” said Federal Reserve Board Governor Lael Brainard.

According to PYMNTS, the Fed’s initiative to speed up work on a new digital dollar, with the intent of revealing a prototype by July, has caused wariness in the financial sector.

Banks are concerned the unveiling of a digital coin could undercut their profits, and the industry trade group, the American Banking Association (ABA), has lobbied Congress to consider the digital coin “unnecessary.”

The new popularity of bitcoin and its tremendous rise in prices have caused governments in the U.S. and elsewhere to start considering the possibility of developing a serious digital currency of their own.

Treasury Secretary Janet Yellen said the plan has merit because of the ways it could help underbanked and unbanked Americans.

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