PACE Act Pushes Fed Payment Access for Nonbanks, Crypto Firms

Key Takeaways:

• U.S. Reps. Young Kim and Sam Liccardo introduced the PACE Act to modernize payments.
• Bill aims to open Fed systems like Fednow, cutting fees and boosting fintech competition.
• Blockchain Association backs reform, highlighting exclusion of digital asset payment companies from Federal Reserve payment rails.

New Bill by U.S. Lawmakers Seeks to Modernize Payment Infrastructure

U.S. lawmakers are moving to overhaul the country’s payment infrastructure with a bipartisan bill designed to speed up transactions and reduce costs for consumers and businesses.

Representatives Young Kim and Sam Liccardo have introduced the Payments Access and Consumer Efficiency (PACE) Act, which would allow qualified nonbank payment firms to access Federal Reserve payment systems directly. The proposal aims to remove intermediaries that often slow transfers and increase fees.

“Hardworking Americans shouldn’t have to wait days to access their own money or pay extra just to move it,” Kim said, describing the current system as outdated. “PACE Act modernizes our system to deliver faster payments, lower costs.”

Under the current framework, most digital payment providers rely on partner banks to access clearing and settlement systems such as Fedwire and FedACH. That structure can add layers of cost, with intermediaries charging significant markups that are ultimately passed on to users.

Liccardo said expanding access could improve competition and reduce those burdens. “We can reduce the burden of bank fees borne by too many American families by enabling broader access to innovative payment systems,” he said.

Industry Groups Laud PACE Act

The legislation has drawn support from a range of industry groups, including those representing fintech and digital asset firms. Advocates argue the bill could level the playing field by allowing regulated payment providers, including crypto-linked companies, to operate more efficiently.

“For too long, digital asset payment companies have been locked out of the same financial infrastructure that their competitors have access to,” said Summer Mersinger, CEO of the Blockchain Association. She added that the bill would enable “faster, less expensive, and more competitive payment services.”

The PACE Act proposes a new federal registration framework for payment companies, overseen by the Office of the Comptroller of the Currency. Firms that meet the criteria, such as holding multiple state licenses, could gain direct access to certain Federal Reserve systems, including FedNow.

The bill also includes safeguards aimed at protecting consumers. Companies would be required to fully back customer funds with liquid assets, segregate those funds from corporate balances, and meet strict risk management standards. In the event of insolvency, customers would have priority in recovering funds.

Industry experts say the reform is overdue. Penny Lee, CEO of the Financial Technology Association, said consumers “shouldn’t have to wait days for a direct deposit to clear,” adding that broader access to payment rails could bring the U.S. in line with other major economies.

The proposal comes as policymakers face pressure to modernize financial infrastructure. Supporters argue that faster, cheaper payments could improve cash flow for small businesses and reduce friction in everyday transactions, from payroll to bill payments.

For now, the PACE Act reflects a growing consensus that the existing payments framework, built for a pre-digital era, may no longer meet the needs of a rapidly evolving financial landscape.