Federal Reserve Governor Waller Proposes “Payment Accounts”: A Potential New On-Ramp for Payments Innovators

Gov. Waller described the payment account as a streamlined, low-risk alternative to the traditional Federal Reserve “master account.” These accounts would be available only to institutions that are legally eligible under the Federal Reserve Act or other federal statute, including member banks, depository institutions as defined in 12 U.S.C. § 461(b)(1)(A), and other entities expressly authorized by statute such as U.S. agencies or foreign banks under 12 U.S.C. §§ 358 and 391. Importantly, the payment account concept would not change this statutory eligibility framework. Entities lacking a qualifying depository charter—such as unlicensed fintechs or nonbank stablecoin issuers—would remain ineligible to hold any form of account directly with a Federal Reserve Bank. The proposal instead focuses on operational accessibility for entities that are already legally eligible but may not require or qualify for the full suite of services associated with a traditional master account.

Gov. Waller explained that the payment account would provide direct access to Federal Reserve payment rails, such as Fedwire and FedNow, but with limitations designed to manage risk. Balances in these accounts would not earn interest, accounts would not have daylight overdraft privileges, and the Reserve Banks could impose balance caps to control the potential impact on the Federal Reserve’s balance sheet. Payment account holders would also be ineligible for discount-window borrowing and for services involving intraday credit exposure. Waller also indicated that these accounts would be subject to a more streamlined review process, reflecting the reality that payments innovation operates on a faster timeline than traditional banking developments.

The concept builds upon and implicitly responds to the recommendations of the “President’s Working Group on Digital Asset Markets” (PWG), whose September 2025 report, “Strengthening American Leadership in Digital Financial Technology,” called for substantial improvements to the Federal Reserve’s master account process. The PWG urged the Federal Reserve, OCC and FDIC to establish clear and transparent procedures governing applications for both bank charters and Reserve Bank master accounts, including published timelines for decision-making. These recommendations reflect longstanding industry frustration with opaque and protracted review processes that have left novel depository institutions—such as state-chartered trust companies and special-purpose depository institutions—without predictable pathways to Federal Reserve access.

The process for the Federal Reserve to adopt such a change would proceed within its existing rulemaking and policy-making authority. Because the proposal concerns the operational structure of accounts maintained at the Reserve Banks, rather than the statutory definition of eligibility, no act of Congress would be required. The Board of Governors of the Federal Reserve System could initiate the change through internal staff study and the issuance of proposed amendments to the existing “Guidelines for Evaluating Account and Services Requests.” Those guidelines, adopted in 2022, already establish a risk-based framework for assessing applications for master accounts and related services.

The potential benefits of such a framework are clear. By creating a lower-risk, lower-friction access point for legally eligible payment institutions, the Federal Reserve could promote competition, innovation and inclusion in the payments system, while reducing reliance on correspondent banks. The structure would also enable faster deployment of payment technologies that leverage distributed ledger technology and tokenized settlement of assets.

Gov. Waller stated in his remarks that the Federal Reserve will be providing additional information about payment accounts shortly. Firms considering applications for bank charters or master accounts should monitor the Federal Reserve’s forthcoming deliberations closely. While the payment account idea remains in the exploratory stage, it signals a material shift in tone toward engagement with the private sector on payments innovation, and a potential softening of the structural barriers that have historically limited access to the Federal Reserve’s core infrastructure.