Payment-System Access
When the Fed announced its new instant payment system in 2020, it made it clear that access would be limited to traditional insured depository institutions (IDIs) and ever since has shown no public inclination to open the system. Now, however, it is seeking views on precisely that, a move surely reflecting the OCC’s decision to authorize a special-purpose fintech charter and new cryptocurrency national trust banks along with plans for a national payment charter and demands from tech-platform companies for payment system access either directly or via industrial loan company (ILC) and similar charters. Payment-system access is of extraordinary strategic value to financial and commercial firms because it eliminates the need for sometimes-costly intermediaries and creates a platform for additional services. However, the rationale for restricting access to IDIs has long been that less-regulated entities pose risks not only to the finality and certainty essential to payees, but also to financial stability if significant volumes of transactions are mishandled in ways that create systemic risk.
