FDIC clarifies supervisory approach to payment processing relationships with merchant customers

What happened

• The guidance targets merchant customers involved in activities deemed higher risk, such as gambling or adult entertainment.
• Banks must assess the risk profile of these merchants and ensure appropriate controls are in place.
• Supervisors will focus on the adequacy of risk management, monitoring, and compliance frameworks for such relationships.

Why it matters

Banks that support merchant payment processing will need to strengthen risk assessments and monitoring for high‑risk merchant categories to satisfy FDIC expectations.

Business impact

Enhanced oversight may require additional compliance resources and could affect pricing or service offerings for high‑risk merchants.