Fed Advances Proposed ‘Skinny’ Payment Account Framework for Nonbanks

The U.S. Federal Reserve sought feedback in December 2025 on a prototype for “skinny” payment accounts. The initiative responded to eligible institutions without federal deposit insurance that focus on payments or crypto and want direct access to Fed payment systems, bypassing correspondent banks to reduce costs and speed settlement. The framework would not expand statutory eligibility, but could reshape how nonbanks access central bank payment rails.

The Federal Reserve Board formally proposed the rule on May 20, 2026. Each Reserve Bank could set an end-of-day balance based on expected payment activity, with the cap raised to $1 billion from $500 million under the prototype. The accounts would pay no interest and provide no access to intraday overdrafts or the discount window, while reviews would generally be completed within 90 days. The Fed also proposed pausing decisions on applications from Tier 3 institutions, with the pause expected to end no later than December 31, 2026.