Some of the largest U.S. financial institutions are considering acquiring a payment network that would allow them to collect higher fees on debit card transactions while bypassing existing federal restrictions.
JPMorgan Chase, Bank of America, Wells Fargo, and PNC Financial Services Group held preliminary talks in recent months about a potential acquisition of one of the payment networks owned by FinTech company Fiserv. According to The Wall Street Journal, the discussions remain at an early stage.
The banks’ interest stems from the Durbin Amendment, which was enacted as part of the Dodd-Frank Act. The provision caps the debit card interchange fees that banks with more than $10 billion in assets can charge merchants when transactions are routed through third party payment networks. However, those limits don’t apply to banks that own their own payment infrastructure.
According to The Wall Street Journal sources, the discussions focused on Fiserv’s STAR and Accel debit payment networks, which the company uses to route and process debit card transactions. Owning such infrastructure would allow banks to route transactions themselves and increase revenue from debit card interchange fees, which generate billions of dollars across the industry each year.
At the same time, some participants in the discussions remain skeptical about the prospects of a deal, citing concerns that an acquisition could trigger opposition from lawmakers, regulators, and merchant groups.
The interest shown by the largest U.S. banks reflects intensifying competition in the payments industry. Financial institutions are looking for new growth opportunities as the crypto sector and FinTech companies expand rapidly and the regulatory landscape evolves. Most recently, a group of leading U.S. banks unveiled a new platform for tokenized deposits.
