President Donald Trump has directed federal regulators to examine how fintech companies gain access to the Federal Reserve's payment services, and to consider easing the path for eligible firms to obtain bank or credit union charters. The executive order, announced Wednesday, targets two distinct but related areas of financial oversight that have long drawn complaints from digital lenders, payment startups, and other nonbank financial firms.
What the order targets
The first part of the order instructs the Treasury Department and other relevant agencies to review current policies governing fintech companies' access to the Fed's payment rails. Many fintechs rely on partner banks to clear transactions, a setup that can introduce delays and extra costs. The review is meant to assess whether those rules are unnecessarily restrictive.
The second piece asks regulators to revisit their approval processes for fintechs that want to apply for bank or credit union charters. Currently, only a handful of nonbank lenders have successfully navigated the lengthy application process. The order calls for streamlining those procedures for companies deemed eligible, though it does not define eligibility criteria.
Potential impact on fintech firms
For fintechs, the directive could open the door to direct participation in the Fed's payment systems, which now require either a bank charter or a sponsorship from an existing bank. Direct access would mean lower transaction costs and faster settlement times—advantages that larger banks already enjoy. The charter review, meanwhile, might allow more fintechs to operate as full-fledged banks, subject to the same capital requirements and oversight, but with the ability to take deposits and lend directly.
Critics have argued that the current system forces fintechs to rely on a small number of partner banks, creating concentration risk and limiting competition. The order does not mandate any specific changes but pushes agencies to report back with recommendations.
Next steps and regulatory timeline
The order sets no hard deadline for the reviews. The Treasury Department, along with the Federal Reserve and other banking regulators, must now coordinate their analyses and propose changes. Industry groups are expected to submit comments in the coming weeks. The White House has not indicated whether it will pursue legislation to codify any resulting changes.
For now, the directive leaves open the question of which fintechs would qualify for streamlined charters, and what safeguards would accompany broader access to Fed payment services. Those details will emerge only after regulators finish their work.
