The Federal Reserve Proposes Rule Paving Way for New Payment Accounts

In May, the Trump Administration signed an Executive Order, “Integrating Financial Technology Innovation Into Regulatory Frameworks” (the “Order”), which intends to encourage streamlining regulatory processes that slow innovation and entry into the market by financial technology (“Fintech”) firms. The Order places the impetus on the federal financial regulators, including the Board of Governors for the Federal Reserve System (“FRB”), to set forth options for achieving greater integration of Fintech firms into existing payment systems.

In response to the Order, the FRB proposed a limited-purpose payment account, which it has termed a “Skinny Account,” which would facilitate eligible institutions’ settling payments. Skinny Accounts provide narrower access than traditional accounts and attempt to prevent such accounts from being used as a substitute for traditional banking. The proposed rule restricts Skinny Accounts in the following ways:

• Skinny Account holders will not have the same access to the central bank balance sheet as traditional institutions do;
• Skinny Account holders will have limited overnight balances and such limitations will be based on the expected payment activity of the Skinny Account holder;
• Skinny Account holders will receive no interest on the maintained overnight balances;
• Skinny Account holders will not be granted access to the discount window; and
• Skinny Account holders are subject to automated controls preventing overdrafts.[1]

The Skinny Account proposal further requires the Fintech firms to demonstrate efforts taken to comply with the Bank Secrecy Act and adherence to regulatory requirements to anti-money laundering programs.

The comment window for the proposed rule closed on July 27, 2026. Overall, the proposal was well received, although banks emphasized the importance of clarity between the differences in payment accounts and master accounts, and ensuring that there be robust risk controls in place. Concerns surrounding risk mitigation are echoed by some FRB members.[2] On the flip side, Fintech interested commenters argued the harsh restrictions imposed by the proposed rule are restrictive. Under the proposed rule, commenters believe Fintechs would lack access to the FedACH network, eliminating the practical utility of such a payment account.

We will continue to monitor developments in connection with Skinny Accounts and provide any significant updates.

Halle A. Hayhurst
Aiden Welsh, Summer Associate