Payment Rails and Fintech Access: Fed Review Ordered

A new directive from President Donald Trump tasks the Federal Reserve with reassessing how nonbank firms connect to its core payment infrastructure, aiming to widen access while preserving stability and consumer protection.

Dive Brief: Payment Rails and Fintech Access

• President Donald Trump instructed the Federal Reserve Board of Governors to reexamine criteria for connecting to central bank payment rails for fintech firms. In fintech, “rails” means the underlying networks and systems that move money and settle transactions, such as the automated clearing house network, Fedwire, and card networks.
• The executive order aims to lower entry hurdles and promote innovation and competition while preserving safety and resilience, according to a White House fact sheet.
• The American Bankers Association urged regulators to support innovation without compromising a well‑regulated financial system.

Dive Insight: Policy and Industry Responses

In a Tuesday press release, Financial Technology Association chief executive officer Penny Lee praised the order as a win for millions who use digital tools to pay bills, manage accounts, and reach financial services.

The group said the action accelerates modernization of the United States payment system and could reduce the cost of moving money for consumers and small businesses.

The order arrives as the House of Representatives weighs legislation introduced last month to grant eligible fintech intermediaries access to FedACH and FedNow.

Called the Payments Access and Consumer Efficiency (Pace) Act, the bill was filed by California lawmakers Rep. Young Kim, a Republican, and Rep. Sam Liccardo, a Democrat.

House Financial Services Committee Chair Rep. French Hill said the Federal Reserve is pursuing a consistent approach to payments licensing across the System, speaking Wednesday at a fintech conference hosted by Semafor and the Financial Technology Association.

Hill added that the House bill will spark a robust discussion about whether a nationwide payments licensing framework is needed instead of relying solely on state‑by‑state money services licenses.

He noted that Federal Reserve Governor Christopher Waller is leading a review intended to prevent the 12 Reserve Banks from taking divergent stances on access for financial services firms.

The American Bankers Association also argued that any company delivering bank‑like services should face the same rigorous regulatory oversight and consumer protection standards.

Last year, Waller floated a “skinny” account providing limited connectivity to Fed rails, positioned as a better fit for fintechs; a December follow‑up drew criticism from some firms as too restrictive.

At the same Washington event, Comptroller of the Currency Jonathan Gould called the directive a long‑overdue reassessment of Federal Reserve regulations.

The order directs the Fed to deliver its findings, options, and recommendations within 120 days.

A common framework summarizes fintech’s core drivers in five themes:

• Digitalization: Shifting financial services from paper and branch-based workflows to software, online channels, and real-time processing.
• Disruption: Challenging legacy banking models with new products, pricing, and customer experiences.
• Decentralization: Moving some activities away from single, centralized intermediaries by using distributed networks and alternative settlement models.
• Democratization: Broadening access to tools like payments, investing, and lending for more people and smaller businesses.
• Data: Using data collection and analytics to improve decisions such as underwriting, fraud prevention, and personalization.

Five enabling technologies are often cited as foundational building blocks:

• Artificial Intelligence: Automating decisions and predictions for tasks like fraud detection, customer support, and credit risk.
• Blockchain: Providing shared ledgers and programmable transactions that can support certain settlement and record-keeping use cases.
• Cloud Computing: Scaling infrastructure and speeding product delivery without relying on on‑premises data centers.
• Big Data: Processing large, varied datasets to identify patterns, manage risk, and tailor offers.
• API: Connecting systems so banks, fintechs, and partners can exchange data and initiate actions securely.

Fiserv services are used across the banking industry in different ways:

• Core processing clients: Many community and regional banks use Fiserv core platforms such as DNA and Premier to run day‑to‑day deposit and loan operations.
• Digital banking users: Some banks use Fiserv for online and mobile banking experiences, including account servicing and money movement features.
• Card and payments processing participants: Banks may rely on Fiserv capabilities for issuing support, transaction processing, and related services.
• Bill pay providers: Certain banks use Fiserv solutions to support consumer bill payment and presentment workflows.
• Merchant and acquiring relationships: Some banks use Fiserv offerings to provide merchant services and payment acceptance solutions to business customers.