PACE Act Targets Faster Payments With Fed Access for Fintechs

• PACE Act introduces optional federal licensing for fintechs, requiring compliance, reserves, and oversight by the OCC.
• Direct access to Fed systems like FedNow and Fedwire aims to cut delays, lower costs, and reduce reliance on banks.
• Industry groups support the bill, citing improved competition, infrastructure access, and stronger consumer protections.

U.S. Representatives Sam Liccardo and Young Kim introduced the bipartisan PACE Act this week to modernize payment access and reduce transaction costs. The proposal creates a federal framework for fintech and crypto firms to access Federal Reserve systems. Lawmakers aim to speed up payments and cut fees tied to current multi-layer banking processes.

Bill Creates Optional Federal Licensing Framework

The PACE Act establishes an optional national license for qualified payment providers. These firms must hold at least 40 state money transmitter licenses to qualify. The Office of the Comptroller of the Currency would oversee this framework.

However, the system does not replace state regulation. Instead, it offers a streamlined federal option with defined review timelines. Approved firms must maintain full reserves, segregate customer funds, and meet strict compliance standards.

Direct Fed Access Aims to Cut Delays and Fees

Under the proposal, approved providers gain direct access to Federal Reserve payment systems. These include Fedwire, FedNow, and FedACH services. This access reduces reliance on intermediary banks that often slow transactions.

Currently, many payments pass through several institutions before completion. As a result, delays and added costs affect both consumers and businesses. Representative Sam Liccardo said the bill targets these inefficiencies and aims to lower fees.

Additionally, the bill aligns with Federal Reserve Governor Christopher Waller’s “skinny master accounts” concept. It also gives the Federal Reserve Board final authority over account approvals, rather than regional banks.

Industry Groups Back Expanded Payment Access

Several industry organizations expressed support for the proposal. These include the Financial Technology Association, Blockchain Association, The Digital Chamber, and the Crypto Council for Innovation.

According to Blockchain Association CEO Summer Mersinger, the bill addresses limited infrastructure access for digital asset firms. Meanwhile, CCI CEO Ji Hun Kim highlighted improved competition and consumer protections under the framework.

The proposal also includes insolvency protections, prioritizing customer funds if a provider fails. As discussions continue, lawmakers and industry groups focus on expanding secure and efficient payment options.

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