The Federal Reserve is exploring the introduction of a "skinny" master account that would give access to basic Fed payment services to fintechs and other providers that currently have to work with third-party banks, says Governor Christopher Waller.

Finextra reports that speaking at the Fed’s first Payments Innovation Conference, Waller says that the skinny, or "payment account", could be beneficial to firms focused on payments innovation that may not want or need all the "bells and whistles" of a master account, or access to the full suite of Federal Reserve financial services.

The account would provide access to the Fed payment rails but, unlike masters accounts, would not pay interest on balances, could include balance caps, and would not provide daylight overdraft privileges or discount window access.

Says Waller: "The idea is to tailor the services of these new accounts to the needs of these firms and the risks they present to the Federal Reserve Banks and the payment system. Accordingly, and importantly, these lower-risk payment accounts would have a streamlined timeline for review."

Fed staff have been instructed to examine the idea and will engage with interested stakeholders to hear perspectives on the benefits and drawbacks.

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