Fed Proposes New Type of Account as Fintechs Near Payment Rails

The Federal Reserve unveiled a proposal Wednesday to establish a new type of limited payment account, in move likely to be applauded by fintech firms.

The plan is a long-awaited next step that would help clear and settle payments for fintechs and non-traditional financial institutions that have pushed for direct access to the payment systems, which are historically used by banks.

The proposed account, which is subject to public input, would be “tailored to support innovation” while also “mitigating material risks to the reserve banks and payment system,” the agency said in a statement.

The Fed last year floated the ...