by Matt Rej
Fiserv is exploring the sale of one of its debit card networks. While acquisitions in the payments space aren’t uncommon, network sales are extremely rare and can create a ripple effect industry-wide.
What makes this story so significant is that the largest US banks are on the list of potential buyers. If a big bank buys one of Fiserv’s debit networks, that bank could bypass federal laws that currently cap how much large banks can earn from debit card transactions.
What We Know About the Fiserv Debit Network Talks
According to the Wall Street Journal, several large US banks have held preliminary discussions about acquiring one of Fiserv’s debit networks.
This report matters because it’s not just about Fiserv selling an asset. The bigger story is whether a large bank could use network ownership to earn more money on debit card transactions.
Here are the key points:
- Fiserv currently owns two debit networks: STAR and Accel.
- JPMorgan Chase, Bank of America, Wells Fargo, and PNC were among the banks involved in early discussions.
- No deal has been finalized quite yet, and some banks have already decided they’re unlikely to move forward.
- Large banks are currently subject to federal debit interchange caps under the Durbin Amendment.
- Those caps limit how much banks can earn on debit card transactions.
- But a bank-owned debit network could potentially create a path around those limits.
The fact that multiple banks of this size are even joining the conversation is significant. And it’s worth understanding what could happen if a Fiserv-owned debit network is ultimately sold to one of the aforementioned banks.
Debit has traditionally been one of the lower-cost card types for merchants. So if large banks use network ownership to improve their own economics, the costs will eventually work their way back to the merchant.
Why a Deal Like This Makes Sense For Fiserv
From Fiserv’s perspective, this story doesn’t surprise me at all. The company has been struggling lately, and it’s something I’ve been following closely as Fiserv’s financial issues are foreshadowing higher fees for merchants.
Over the last year, Fiserv’s earnings growth dropped, their stock price fell, and they had multiple executive-level changes. And that was all before their CEO walked away voluntarily after just 13 months on the job.
Leadership is now under tremendous pressure to deliver results to shareholders. Activist investor Jana Partners has upped its stake in Fiserv and been urging leaders to sell non-core assets and refresh its brand.
So offloading a multi-billion-dollar network could be exactly what Fiserv needs to show improved profitability at least in the short-term. And long-term, it can allow them to be more processing-focused.
How Banks Could Bypass Debit Interchange Caps
To understand why big banks are so interested in acquiring one of Fiserv’s debit networks, you need to understand the Durbin Amendment (and the loophole buried inside of it).
Section 1075 of the 2010 Dodd-Frank Act, commonly known as the Durbin Amendment, gives the Federal Reserve the authority to cap debit card interchange fees for large banks. Banks with $10+ billion in assets are effectively capped at 0.05% + $0.22 per debit transaction.
This is just a fraction of what unregulated debit cards cost, and analysts estimate that this federal cap reduced interchange revenue by over $8 billion annually for banks subject to the regulation.
But if a large bank owns the network used for its own debit card transactions, the economics can change.
There’s an exemption to the Durbin amendment for certain closed-loop or three-party networks, where the card issuer and card network are the same entity.
In simple terms, this means that if a large bank (Chase, BOA, Wells Fargo, etc.) acquires STAR or Accel from Fiserv, they’ll no longer be subject to interchange caps on debit transactions on cards that they issue.
Instead of being capped at 0.05% + $0.22, unregulated debit cards can carry interchange rates as high as 1.90% + $0.25 per transaction. With most categories falling around 1.20% + $0.10 to 1.65% + $0.15.
When This Deal Would Actually Happen
The deal itself is far from guaranteed. And the short answer is that it won’t happen anytime soon (if at all). Here’s why:
- Talks are still preliminary.
- There’s no signed deal, confirmed buyer, or confirmation that a sale will even occur.
- Even if Fiserv comes to terms with a large bank, they’ll still need to face regulatory hurdles.
We can look to the merger between Capital One and Discover as the blueprint here for an estimated timeline.
Capital One announced its plans to acquire Discover in February 2024, but the deal didn’t officially close until May 2025. That’s roughly 14 months from announcement to close, and that merger was explicitly framed around network competition (both companies argued that the combined entity would be a stronger rival to Visa and Mastercard).
Any deal involving Fiserv’s sale of STAR or Accel that’s framed around bypassing Durbin caps would likely face harder scrutiny from regulators.
What This Means for Merchants
If a deal eventually goes through and the current Durbin exemption holds, merchants could face higher debit interchange rates on cards issued by whatever bank acquires the network.
Right now, if a customer pays with a Chase or BOA debit card, merchants pay around $0.22 plus 5 basis points for that transaction. But if either of those banks owned the network, the cap goes away.
It would definitely impact certain businesses more than others. You need to assess your current card mix to assess your potential exposure here.
STAR seems to be the debit network at the center of these talks, and the network serves 115+ million debit cardholders issued by over 2,800+ financial institutions.
Let’s say 90% of your transactions are credit cards, then the impact would likely be minimal. As only a portion of your 10% debit mix would be impacted (maybe only 3% of those cards are issued by whatever bank acquires the network, and half get routed through that network).
But if 40-50% of your customers pay using a debit card, it’s a different conversation altogether. You will almost certainly feel the impact of a deal like this, if it ultimately happens.
If you noticed an increase in debit card transaction fees as a result of the Capital One and Discover merger, then you’re likely to feel it here too.
Final Thoughts
Even if the talks collapse (and there’s a reasonable chance they do), the story tells us something important about where the payments industry is headed.
Despite new laws being passed to protect both cardholders and merchants, big banks and processors are always looking for solutions to compete for fee revenue.
For merchants, this is definitely worth watching. Not because any change is imminent, but because the deal between Capital One and Discover already proved that this concept works. So if JPMorgan or Bank of America can find a cleaner path to the same outcome, it’s hard to imagine they won’t take steps to get there.
That’s why it’s so important to have a handle on your processing at all times. Rate changes, both at the network level and processor-imposed, can happen at any time, often with little notice.
You can get out ahead of these types of changes by optimizing merchant fees elsewhere. So if you are impacted down the road, the costs won’t feel as significant.