PACE Act Would Open Fed Payment Rails to FinTechs

New proposed federal legislation would give more financial institutions access to federal payment systems.

The Payments Access and Consumer Efficiency (PACE) Act, introduced Tuesday (April 21), is designed to modernize the way companies access payment rails, according to U.S. Reps. Young Kim, R-Calif., and Sam Liccardo, D-Calif., who introduced the bill.

“Whether it’s splitting a bill, paying rent, or waiting on a paycheck to clear, Americans are often stuck dealing with delays and increased fees due to outdated payment infrastructure,” Kim said in a news release. “Hardworking Americans shouldn’t have to wait days to access their own money or pay extra just to move it. My PACE Act modernizes our system to deliver faster payments, lower costs, and helps families and small businesses keep more of their hard-earned money.”

Liccardo added that the bill would “reduce the burden of bank fees borne by too many American families by enabling broader access to innovative payment systems.

The release noted that the legislation has the blessing of the Financial Technology Association, Blockchain Association, The Digital Chamber and The Crypto Council For Innovation.

“American consumers and small businesses shouldn’t have to wait days for a direct deposit to clear or a vendor check to arrive in the mail,” said Penny Lee, president and CEO of the Financial Technology Association.

The legislation establishes “an optional federal supervisory framework for nonbank payment service providers (companies like money transmitters that hold 40 state licenses) administered by the Office of the Comptroller of the Currency (OCC).”

In addition, the bill would streamline federal registration for “qualified payment companies” and mandate that providers follow certain requirements, such as maintaining 1:1 reserves, meeting risk and record-keeping standards, and providing consumer protections.

As PYMNTS wrote earlier this year, there are several reasons why FinTechs and payment providers might find the idea of accessing federal payment rails appealing.

“Direct settlement reduces latency, dependency risk and reconciliation complexity. PYMNTS reporting has consistently shown that speed, certainty and transparency are becoming competitive differentiators as real-time payments scale,” that report said. “As for real-time settlement, the central bank said it intends to expand the operating days of the Fedwire Funds Service and the National Settlement Service to run Sunday through Friday, including weekday holidays, with the changeover happening in 2028 or 2029.”