Fed ‘skinny’ account idea draws criticism

Core Perspective - The proposed Federal Reserve "skinny" account may face limitations if fintech companies are not granted access to FedACH, as highlighted by fintech trade groups [1][5][6] Group 1: Proposed Federal Reserve Account - The Federal Reserve published a proposal for a prototype payment account in December, inviting public comments that were due recently [2] - Fintech companies are optimistic about the potential for direct access to the Fed's real-time payments system and the possibility of applying for full-access master accounts [2][3] Group 2: Access Limitations - Under the current proposal, fintechs would only have access to the FedNow instant payments system and the high-dollar FedWire rail, but not to the high-volume FedACH, which is the most utilized payment rail in the U.S. [3] - The exclusion from FedACH means that companies must rely on costly partner bank intermediaries for most transactional volumes, leading to hidden costs for consumers and businesses [5] Group 3: Industry Concerns - The Financial Technology Association expressed concerns that the U.S. payment system relies on outdated structures that do not meet the demands of the modern digital economy [6] - The lack of access to the Fed's clearing and settlement infrastructure results in additional frictions, costs, and delays for well-regulated payment firms operating through sponsor institutions [7] - The American Bankers Association recommended a cautious approach for the Fed, suggesting a "crawl, walk, run progression" for companies applying for the prototype account [7]