Wall Street banks explore payments network deal to bypass fee caps: WSJ

Some of the largest U.S. banks have explored acquiring a debit payments network that could help them sidestep federal caps on debit-card interchange fees, The Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The report said JPMorgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), Wells Fargo & Company (NYSE:WFC) and PNC Financial Services Group Inc (NYSE:PNC) have held preliminary discussions in recent months about acquiring one of the debit networks owned by fintech company Fiserv Inc (NASDAQ:FISV). The talks remain tentative, and several banks have already concluded they are unlikely to pursue a transaction, it added.

The Wall Street Journal said the discussions center on Fiserv’s STAR and Accel debit networks, which process transactions between merchants and financial institutions. Ownership of a payments network could allow banks to process debit-card transactions through their own infrastructure, potentially exempting them from interchange fee caps imposed under the Durbin Amendment, a provision of the 2010 Dodd-Frank Act.

According to the report, bank executives have long argued the fee limits have reduced revenue that previously helped fund free checking accounts, fraud protection and debit-card rewards programs. Merchants and consumer advocates, however, have maintained that the caps have lowered payment costs and helped restrain retail prices.

The newspaper said some executives have expressed concerns that pursuing such a deal could trigger political and regulatory scrutiny, particularly given longstanding debates over interchange fees and competition in the U.S. payments industry.

The report follows Capital One Financial‘s acquisition of Discover Financial Services, which gave the lender control of its own payments network and renewed interest among larger banks in vertically integrating payment processing infrastructure.

Fiserv, whose shares have come under pressure over the past year, owns two of the largest debit-card payment networks in the United States.