The WSJ is reporting that major banks (JPMorgan, Bank of America) are exploring purchasing STAR and Accel. STAR and Accel are owned by Fiserv and are two of the largest debit card processors. The major banks are interested in making this purchase because of the Durbin Amendment, this limits debit interchange fee that can be charged to $0.22 + 0.05%. There are two carveouts though:
- Smaller banks and credit unions with under $10 billion in assets are exempt
- Interchange is only capped when transactions are routed over third party networks
If a major bank did purchase STAR and Accel they could route these transactions through their own network and the cap wouldn’t apply anymore. This is similar to the move Capital One made acquiring Discover, as that deal also included the PULSE debit network. Sunrise Banks has been launching rewards debit cards (such as the Southwest debit card) and aren’t subject to caps either. Current administration hasn’t shown any interest in blocking these sorts of acquisitions, although will surely face significant pressure from banks that were unwilling or unable to purchase a debit processing network.
