The Payments Access and Consumer Efficiency Act—universally shortened to the PACE Act—would create a federal pathway for nonbank payment companies to access Federal Reserve infrastructure directly. Not through a sponsor bank. Directly.
For most of the industry's history, that sentence would have been unthinkable.
The bill is early-stage legislation introduced by Representatives Young Kim (R-CA) and Sam Liccardo (D-CA). There's no Senate companion yet. Its odds of passing without significant changes are genuinely unclear. But for companies that hold money transmitter licenses (MTLs) across multiple states—or are in the process of building that portfolio—the PACE Act reframes something most compliance teams think of as a cost center into something closer to a strategic asset.
What the PACE Act Does
The bill creates a new federally registered category of payment company: "registered covered providers." These are nonbank firms that complete an OCC application process and, if approved, can open a payments reserve account at the Federal Reserve with direct access to Fedwire, FedNow, and FedACH.
Right now, fintechs and money services businesses (MSBs) reach those rails through sponsor banks. That intermediary layer costs real money: firms with direct Federal Reserve access pay fractions of a cent per transaction, while nonbanks accessing through bank partners face markups many times higher. The PACE Act's core argument is straightforward: reduce structural cost, expand competition, and bring the U.S. closer to peer economies where nonbank payment firms already have some form of direct rail access.
There's also a parallel context worth knowing. The Federal Reserve has separately been developing a prototype "skinny master account" structure that would let nonbank providers access some central bank services—FedNow and Fedwire—but not FedACH. Fintech trade groups criticized that approach for still requiring bank partners to reach the ACH network. The PACE Act would go further, offering access to all three rails for qualifying companies.
Who Qualifies Under the PACE Act
Eligibility is deliberately narrow. To be a "covered provider" eligible to apply for OCC registration, a company must hold either:
- A state bank or credit union charter, or
- At least 40 active state money transmitter licenses
That threshold rules out early-stage fintechs entirely, which is probably intentional. The bill is targeting large, nationally scaled payment companies already operating under meaningful state regulatory oversight. It does not require FDIC insurance, which means special purpose state banks (including those held by companies like Kraken, Stripe, and Fiserv) could potentially qualify under the charter prong.
For MTL holders: the 40-license number is the qualifying floor, and it's worth knowing exactly where you stand against it.
The OCC Registration Process
Eligible companies apply to the OCC, which evaluates applications on financial resources, governance and risk management systems, BSA/AML readiness, and demonstrated public benefit (meaning something like improving competition or expanding access to financial services for underserved populations).
The OCC has 180 days to act on a complete application. If it doesn't, the application is automatically approved.
That 180-day window sounds slow, but context matters. The current pathway for stablecoin-focused trust banks involves 120 days for conditional approval, followed by another 12 months to reach full operating authority. Under the PACE Act, a company gets full approval within six months of a complete filing. For companies that prepare their OCC application in parallel with their final licensing pushes, the total timeline from the 40th MTL to federal registration could run 12 to 18 months, a realistic estimate from legal analysts who've reviewed the bill closely.
What Registration Actually Requires
The PACE Act does not create a light-touch federal overlay. It's a bank-like compliance regime, and that's by design.
Registered covered providers must maintain 1:1 reserves against all outstanding customer payment obligations, held in highly liquid assets: cash, Federal Reserve balances, insured deposits, short-term Treasuries, or qualifying government money market funds. Customer funds must be fully segregated from company assets, with detailed records of balances and beneficial ownership.
The OCC would examine registered providers for safety and soundness, risk management, and compliance with federal consumer financial law. Critical third-party service providers could themselves be brought under supervisory review. There's also a fair access requirement: registered providers can't deny or terminate payment services based on customers' constitutionally or statutorily protected beliefs, affiliations, or political views. Business decisions need to be documented and grounded in objective, risk-based criteria. Internal judgment calls are insufficient.
On the insolvency side, the bill moves registered covered providers out of standard bankruptcy proceedings and into a special resolution framework. State regulators get the first option to manage any failure, with the OCC as fallback. Customer payment obligations are prioritized above general unsecured creditors. Segregated custodial assets would sit outside the estate entirely, assuming they've been properly maintained.
The OCC's exercise of resolution authority over nonbank payment firms would be genuinely new territory. The agency hasn't formally resolved uninsured institutions in decades.
What This Means for Your MTL Portfolio
The PACE Act's single biggest implication for money transmitter licensees is this: the license portfolio you've been building for state-by-state compliance is also—potentially—your ticket to federal registration.
That reframe has real strategic consequences.
The path to 40 matters more now. Companies at 30 or 35 licenses have a concrete and close qualifying threshold. The bill also creates a specific incentive to prioritize faster-approving states when filling gaps. If New York and California are your remaining holdouts, licenses in 40 other jurisdictions are enough to qualify: you can operate nationally under OCC approval and return to the slower states afterward.
The Wyoming SPDI angle. For companies without a full MTL stack, there's a second qualifying path: a state bank or credit union charter. Wyoming's Special Purpose Depository Institution (SPDI) charter is the most commonly discussed option for payments-focused companies. Today, the SPDI has real limitations; California and New York don't clearly accept it as preempting their own licensing requirements, and the Custodia Bank master account dispute showed how exposed those charters can be to Federal Reserve discretion. The PACE Act's OCC registration pathway could resolve both problems: clear federal preemption and a defined route to Fed access. That makes the SPDI more interesting than it's been.
Sponsor bank relationships shift. For companies that qualify and register, the dependency on sponsor banks becomes a choice rather than a structural requirement. Even for companies that ultimately don't pursue registration, the existence of a credible alternative changes the negotiating dynamic.
What Compliance Teams Should Do Now
The bill may not pass. It may pass with major changes. But the direction it signals—federal access determined by capability and regulatory standing rather than institutional form—is consistent with where Congress has been pushing for a decade.
A few things worth doing regardless of the bill's trajectory:
- Count your active licenses and know your gap to 40. If you're close, map the fastest path to the threshold, state by state.
- If you're building toward 40, identify which remaining states process applications fastest. A few states routinely approve in three to four months; others run well over a year. The sequencing matters.
- Model what 1:1 reserves would mean for your specific obligations. This is easier to do now, before you're under time pressure, than after.
- And track the bill. A Senate companion, committee markup, or clarification on the preemption question would all be meaningful developments worth knowing about quickly.
The PACE Act reframes money transmitter licensing as a qualification credential for something bigger than state-by-state permission to operate. Whether or not this particular bill is the vehicle, that reframe is probably where the industry is heading.
Why Brico
The PACE Act makes one thing very clear: your MTL portfolio needs to be approached like infrastructure, not just a compliance obligation. How well it's maintained, how current it is across all 50 states, and how quickly you can close gaps will determine whether you're in a position to take advantage of frameworks like this one when they matter.
Your licensing strategy can become your competitive advantage. And Brico is built to help get you there.
Brico is a licensing automation platform purpose-built for fintechs and financial institutions managing money transmitter licenses, MSB registrations, and related state and federal licensing requirements. Leading fintechs use Brico to track license status across jurisdictions, manage renewal deadlines, monitor regulatory changes, and stay audit-ready without building a compliance operations team from scratch.
A few specific things that become relevant in a PACE Act context:
License gap analysis. Brico gives you a real-time view of where you're licensed, where you're not, and what the fastest path to full coverage looks like. If you're at 32 licenses and wondering whether 40 is achievable in 18 months, Brico helps you map that out with state-level timeline estimates backed by data, and determined by our experienced licensing experts.
Regulatory change tracking. The PACE Act won't be the last thing that changes the licensing calculus. Brico monitors state-level regulatory updates—fee changes, new requirements, examination cycles—so nothing slips through while your team is heads-down on other priorities.
Audit readiness. OCC supervision means documentation standards go up. Brico keeps your license records, filings, and compliance history organized and accessible, so when an examiner asks to see your state-by-state compliance posture, the answer isn't a spreadsheet someone's been maintaining by hand. (If you haven't looked at how networked supervision is changing MTL exams generally, that's also worth a read.)
See how Bilt manages a nationwide MTL program without a dedicated licensing headcount, or how 1Money secured licenses across dozens of states in weeks.
If you're thinking through your PACE Act eligibility or working to build out your license portfolio, we'd be glad to talk.
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or regulatory advice. Brico is not a law firm and does not provide legal counsel. Licensing requirements vary by state and depend on your specific business model and circumstances. You should consult with qualified legal counsel before making any licensing decisions or taking action based on this content.
