Stripe, Banks Tell Congress Payment Rules No Longer Fit Modern Commerce

Lawmakers spent much of Wednesday wrestling with a question that reaches well beyond faster payments: whether a regulatory framework built for deposit-taking banks can continue to govern a financial system in which software platforms, digital assets and artificial intelligence are reshaping how money moves.

The hearing, titled “Future of Payments: Promoting Innovation and Fair Markets,” examined whether Congress should create a new regulatory lane for payments companies that neither accept deposits nor make loans but have become central to commerce.

Throughout the hearing, members of the House Financial Services Committee returned to the same question from different angles: Can innovation move faster without weakening consumer protections, bank supervision or financial stability? The answers varied sharply depending on whether the witness represented FinTech, banking, digital assets or consumer advocacy.

Committee Chairman Rep. French Hill, R-Ark., opened the policy discussion by asking David L. Portilla, partner and co-head of the Financial Institutions Group at Davis Polk & Wardwell, whether the nation’s dual banking system still provides the right balance between innovation and oversight. Hill noted that state banking systems have historically functioned as laboratories for innovation, but asked whether payments have reached a scale that now requires greater national consistency.

Portilla agreed that state regulators have fostered experimentation but argued that the current framework begins to break down once payments companies attempt to operate nationwide.

“I think that highlights the limitation of the state system,” Portilla testified. “At a certain scale, a business needs to operate nationwide under a uniform set of standards.”

Today, he said, a payments company must either navigate “a multistate framework that is not fully interoperable” or seek “a national bank charter that is not really fit for purpose.” Congress, he suggested, has an opportunity to create a federal payments framework tailored to companies whose business is moving money rather than taking deposits or making loans.

That theme surfaced repeatedly throughout the hearing.

Do the Rules Match the Business?

Questioning then turned to Eileen O’Mara, vice chair of Stripe, whose testimony advocated for creating a dedicated federal payments charter.

Hill asked directly why nonbanks should receive access to Federal Reserve master accounts.

O’Mara replied that the existing regulatory framework forces payments companies into categories that no longer reflect how commerce operates.

“The current framework is defined as, ‘You’re a banker, you’re not a bank,’” she said. “Our point of view is that is not fit for purpose for a company like Stripe.”

Stripe supports roughly 5 million businesses, she noted, but still operates through what she described as a “patchwork quilt of licenses across every state.” Rather than seeking the authority to lend or accept deposits, the company is asking to be supervised according to the activity it actually performs.

“We are advocating that we are regulated for the business and activity that we do, which is payment processing,” O’Mara said. “Banks obviously are very focused on maturity transformation, taking deposits and lending them out. That’s not the business that we’re in.”

Later, Rep. Pete Sessions, R-Texas, steered the discussion away from regulatory theory and toward everyday commerce.

Rather than focusing on payment infrastructure, Sessions asked what businesses actually need.

“The conversation that I have with businesses all over this country is focused around two things,” O’Mara responded. “How can they grow their business reliably and how can they get access to their funds quickly?”

She pointed to Housecall Pro, whose tradespeople can complete repairs inside customers’ homes and receive payment immediately. Faster settlement, she argued, is not merely about convenience. Small businesses depend on predictable cash flow to pay employees, purchase inventory and pay suppliers.

“The 5 million businesses that are on Stripe, most of those are small businesses,” she said. “Their access to that money quickly is fundamental to their ability to plan.”

Sessions summarized the practical implication: Modernization allows businesses to receive funds immediately rather than waiting for multiple intermediaries to complete settlement. O’Mara agreed, adding that many traditional banking relationships simply do not provide those services today.

The same theme resurfaced later when Rep. John Rose, R-Tenn., argued that payment-specific charters could help preserve the United States’ position as a FinTech leader while maintaining the dual banking system. Rose warned that if the chartering framework fails to evolve alongside financial technology, “we risk falling behind.”

Asked by Rose how Congress could encourage innovation while protecting community banks, Portilla cited the market response to the GENIUS Act, saying the legislation demonstrated “the power of having … legislation to foster investment and innovation.”

O’Mara added that the United States does not lack entrepreneurs. “The failing we have at the moment is the infrastructure doesn’t meet their ambitions,” she said, pointing to jurisdictions including the United Kingdom and European Union that already provide broader payment-system access.

AI, Stablecoins and New Risks

The hearing also looked beyond today’s payment systems toward technologies that may define tomorrow’s.

Rep. Bill Foster, D-Ill., questioned witnesses about agentic commerce and what happens when AI systems begin initiating transactions on consumers’ behalf.

Paige Pidano Paridon, executive vice president and senior associate general counsel at the Bank Policy Institute, said the technology gives lawmakers several issues to ponder.

“The advent of that technology and capability raises a lot of questions,” Paridon said, including, “What happens if an agent executes a transaction or makes a payment that it wasn’t authorized to do?” and who bears fiduciary responsibilities when autonomous systems participate in commerce.

O’Mara agreed that agentic fraud deserves attention but argued current safeguards prevent AI systems from acting independently.

“It would be impossible for an agent to go rogue today,” she said, because “a human has to authorize that.” Still, she called the issue “a very topical conversation” and said payment companies should work with governments to establish appropriate standards as agentic commerce evolves.

Rachel Anderika, head of global operations at Anchorage Digital, added that AI strengthens rather than weakens the case for expanding the regulatory perimeter.

“Agentic payments, this is really where the future of commerce is going,” Anderika said during the hearing. Anchorage is already building fraud detection directly into the technology layer, she told lawmakers, adding that “the regulatory perimeter is a national asset” that should expand to encompass responsible innovators capable of meeting supervisory standards.

Charters and Federal Reserve master accounts emerged as one of the hearing’s central fault lines. O’Mara stated that that payments companies should not have to become banks simply to gain direct access to the payments system.

As for charters, Paridon stated, “Institutions seeking novel charters seek access to the Federal Reserve payment infrastructure and the implicit imprimatur of federal oversight without accepting the full scope of those obligations. That is not a formula for innovation. It is a formula for regulatory arbitrage, and for the gradual erosion of the safety and soundness standards that protect the American public.”

Bank representatives also cautioned lawmakers against viewing payments innovation as something occurring only outside the regulated banking system. In her own testimony, Tara Flynn, policy director of the National Community Reinvestment Coalition, pointed to the possibility of expanding Electronic Fund Transfer Act protections to newer payment methods, positing that existing safeguards should apply more clearly to wire transfers, stablecoins and scams in which consumers are tricked into authorizing payments themselves.

Paridon noted that banks already operate real-time payment networks, tokenized deposit platforms and blockchain-based treasury services. Those efforts, she argued, demonstrate that innovation and prudential regulation are not mutually exclusive. Faster payments, she said, already allow businesses to pay vendors and employees around the clock while giving consumers immediate access to funds.