Congress Moves to Give FinTechs Direct Fed Payment Access

Legislation introduced in the U.S. House this week, known as the Payments Access and Consumer Efficiency Act (PACE Act), would establish a federal registration pathway for nonbank providers seeking direct access to the Federal Reserve’s core payment systems, including Fedwire, the FedNow® Service and ACH.

The proposal lands as real-time capabilities and settlement certainty shift from competitive advantages to baseline expectations across the digital economy.

The PACE Act creates a new designation, “registered covered providers,” that would allow qualifying firms to apply for a “payments reserve account” at a Federal Reserve Bank, granting connectivity to Fedwire Funds Service, FedNow Service and FedACH Services, placing nonbank payment firms on more equal footing with insured depository institutions in terms of infrastructure access.

The bill does not grant a bank charter, nor does it remove oversight. Instead, it constructs an optional federal supervisory regime under the Office of the Comptroller of the Currency (OCC), designed to complement existing state licensing frameworks.

There’s some gatekeeping in the mix: Firms must already operate at scale, holding at least 40 state money transmitter licenses or equivalent charters, before they can apply for registration.

A Federal Framework With Guardrails

The statutory language places emphasis on prudence and operational discipline. Section 3 of the bill sets out the registration process and restricts approval to applicants that demonstrate sufficient financial resources, governance, technical capacity and compliance with the Bank Secrecy Act. It also requires, per the Act’s verbiage, that the applicant show “benefit to the public, including with respect to innovation, competition, and enabling widespread access and use of payment services.”

Once admitted, providers face explicit balance sheet constraints. Section 4 requires that “a registered covered provider shall maintain identifiable reserves backing outstanding payment obligations on at least a 1 to 1 basis.” Those reserves must be held in cash, deposits, short-term Treasurys or similarly liquid instruments.

The provision reflects a clear attempt to align nonbank payment firms with the liquidity discipline typically associated with deposit-taking institutions, without formally extending deposit insurance.

Operational transparency is also codified. The Act mandates detailed recordkeeping of both customer obligations and reserve holdings, while requiring segregation of customer funds in custody arrangements. Risk management standards are further tied to existing federal frameworks, including capital and liquidity rules derived from stablecoin regulation regimes, suggesting a convergence of policy approaches across payments and digital asset oversight.

The legislation extends beyond prudential requirements into conduct standards. Registered providers would be subject to the Equal Credit Opportunity Act and barred from denying service on the basis of protected beliefs or affiliations.

Toward a National Payments System

The most consequential element of the PACE Act lies in its approach to infrastructure access. Section 9 directs that a registered provider may request a payments reserve account from the Federal Reserve, and that such access should be granted “in the same manner and to the same extent” as for insured depository institutions.

For banks, this raises questions about the durability of a long-standing structural advantage. Direct access to Fed rails has historically been tied to charter status, reinforcing the centrality of banks in payment intermediation.

The PACE Act introduces a pathway that could reduce reliance on sponsor banks, particularly for firms operating at scale in digital wallets, merchant acquiring or cross-border flows.

For FinTechs already operating at scale, the benefits are more immediate. Direct settlement could reduce latency, simplify reconciliation and lower dependency risks tied to intermediary institutions. These operational gains have already been cited as drivers of competitiveness in real-time payment environments.

Yet the national system envisioned by the Act introduces its own complications. Supervisory responsibilities would expand, with the OCC overseeing entities that combine elements of technology platforms and financial intermediaries. Coordination between federal and state regulators would remain necessary.

The bill addresses failure scenarios with notable specificity. In the event of insolvency, customer claims tied to payment obligations are given priority behind administrative expenses, reinforcing the principle that user funds should be protected ahead of general creditors.

At the same time, the exclusion of certain custodial assets from bankruptcy estates introduces legal distinctions that may require further clarification in practice.

The legislation signals a shift in how infrastructure is conceived. Connectivity is no longer assumed to be the exclusive domain of chartered institutions. It is becoming a regulated capability, extended under conditions that reflect both opportunity and constraint.