#United States #New York #Federal Reserve #Payments Innovation #Money Services Businesses

FedMSB Files Comments on Fed's Payment Account Proposal

On December 22, 2025, the Federal Money Services Business Association (FedMSB) made public its detailed comments in response to the Federal Reserve's Request for Information (RFI) regarding its proposed 'Payment Account'. This proposal is aimed at enhancing the current system for clearing and settlement, hoping to pave the way for a more innovative approach to handling payments.

Van Young, the President of FedMSB, expressed appreciation for the Federal Reserve's initiative towards exploring new payment access models, but he warned that the current proposal doesn't adequately address the deeper structural issues that exist within the U.S. payments landscape. Notably, this landscape often leaves Money Services Businesses (MSBs) without direct access to Federal Reserve's clearing and settlement infrastructure, requiring them to continue relying on indirect methods which can pose significant challenges.

FedMSB's comments acknowledge the potential for the proposed Payment Account to streamline access for legally eligible institutions like banks. However, the organization emphasized that MSBs remain on the outside when it comes to direct access, which compounds their vulnerability in today's fast-paced payment environment.

The Importance of Direct Access for MSBs

Young highlighted that MSBs are vital players in the payments ecosystem, handling substantial payment volumes and serving millions of consumers. Yet the sector's reliance on indirect access channels leads to various operational risks. He specifically pointed out the trend of 'de-risking'—when financial institutions reduce or eliminate services to higher-risk segments like MSBs—which can lead to significant disruptions, operational strains, and liquidity challenges for these businesses as well as their customers.

"Indirect access works—until it doesn't," Young stated. He explained that as banks contract their support, the reliance on a shrinking number of intermediaries can rapidly escalate risks related to operational efficiency and payment systems.

A Comprehensive Framework for Implementation

Beyond simply critiquing the proposal, FedMSB utilized its comment filing as an opportunity to provide a thorough, actionable blueprint intended to enhance the resilience of the payment system without altering existing eligibility laws. This framework includes:

• - Safeguards for Anti-Money Laundering (AML), Bank Secrecy Act (BSA), Counter Financing of Terrorism (CFT), sanctions compliance, cyber risks, and operational resilience;
• - An escalation and remediation plan for any significant control deficiencies;
• - A standardized set of controls, metrics, and reporting templates designed to boost transparency and efficiency across the indirect settlement spectrum.

FedMSB emphasized the intention behind these tools is to complement the Federal Reserve's supervisory goals, providing a clearer, auditable framework without diminishing current safety measures.

"If indirect access is to remain the norm for many within the payment ecosystem, the safeguards surrounding this access must be clear and durable," Young remarked.

The Timeliness of Comments

The timing of FedMSB's submission aligns with the Federal Reserve's ongoing discussions surrounding the Payment Account RFI as instant payment systems and real-time settlement mechanisms take center stage in discussions about the financial system's stability. FedMSB cautioned that overlooking these access disparities may exacerbate systemic instability in event of market fluctuations or regulatory shocks.

"Payments infrastructure is no longer just behind the curtain," Young noted, emphasizing the critical nature of understanding who can access these systems, how they do so, and under what conditions—issues that now impact competition, continuity, and consumer confidence.

FedMSB's comment was submitted within the allotted public comment period by the Federal Reserve, which concludes 45 days following the publication in the Federal Register. This demonstrates their proactive approach in seeking to reshape the future landscape of payment systems in the U.S.

About FedMSB

The Federal Money Services Business Association (FedMSB) serves as a national nonprofit organization representing Money Services Businesses across the country. Established as both a standard-setting entity and a strategic convenor for the non-bank financial services industry, FedMSB is dedicated to promoting regulatory modernization, technical advances, and the integrity of next-generation financial services.