Some of the largest U.S. banks are exploring a deal that could reshape the economics of debit cards, reopen one of the fiercest payments policy battles and give major issuers a way around federal fee caps they have opposed for more than a decade.
The Wall Street Journal reported Monday (July 6) JPMorgan Chase, Bank of America, Wells Fargo and PNC Financial Services Group have held preliminary discussions in recent months about acquiring the Fiserv-owned debit card network.
The newspaper reported, citing people familiar with the matter, that the talks are early and preliminary and may not lead to a deal. Many banks that have already considered the idea have decided that it is unlikely to move forward, according to the report.
The strategic logic is clear. Capital One’s $50.6 billion purchase of Discover gave it ownership of a card network, allowing it to operate closer to the flow of transactions and reduce reliance on external networks. This deal appears to have led to increased interest among other banks about whether network ownership could change the economics of debt.
As the newspaper put it: “Some of the country’s largest banks have been exploring an acquisition that might allow them to circumvent one of the laws they hate most: limits on the fees they earn from debit card transactions.”
It’s related to the Durbin Amendment, which is part of the Dodd-Frank Act of 2010. The rule limits debit card interchange fees that banks with $10 billion or more in assets can charge merchants when transactions are routed through a third-party network. But the newspaper reported that banks could be exempt from these limits if they also own the network backing the transaction.
This possibility makes Fiserv’s adversary networks strategically important. Fiserv owns STAR and Accel, both of which process debit card transactions. The newspaper noted that the company’s shares fell sharply, creating a potential opportunity for buyers.
The risk is as much political as it is financial. The newspaper reported that some bank executives are concerned that the deal could spark a backlash from lawmakers, regulators and traders. Traders have long argued that lower interchange fees help keep consumer prices low. Banks counter that the fee caps have reduced revenue that previously supported free checking, discount rewards and other consumer services.
The newspaper framed the initial talks as evidence that banks are looking for new influence in payments. The report noted that the discussions, even at an early stage, are “another sign of how eager banks are to find an edge in payments where they can,” as the industry faces rapid change associated with cryptocurrencies and fintech under the Trump administration.
