Major Banks In Talks To Exploit Debit Card Loophole

JPMorgan, Bank of America, Wells Fargo, PNC, and other major banks have reportedly explored acquiring Fiserv's debit-card networks, STAR and Accel, in a move that could help them bypass federal caps on debit-card transaction fees. A law limits the fees big banks can charge merchants, but only if the transactions are routed through an outside network. There are no caps on these interchange fees over a bank-owned network, however. The Wall Street Journal reports: When Capital One Financial bought Discover Financial in a $50.6 billion deal, it got a network that cut out the need for a middleman in card transactions and allowed it to deal more directly with merchants. Now, big banks are looking on with envy because owning a network can mean exemption from a federal law that caps debit-card fees. Those fees collectively amount to billions of dollars each year across the industry, but banks have long complained the government-defined cap limits their ability to offer customers debit-card rewards and other services. Some have been exploring a small deal that could upend the rules, though they are worried about political backlash if they try. Big banks including JPMorgan Chase, Bank of America, Wells Fargo and PNC Financial Services Group have in recent months held preliminary and tentative discussions about a deal to acquire a network owned by the financial-technology company Fiserv, according to people familiar with the matter. There is no certainty a deal will happen. Several of the banks that looked at the Fiserv network have already decided it would be unlikely for them to move forward, some of the people said. Some have privately expressed concern that such a deal could prompt backlash from lawmakers, regulators and merchants, the people added. Read more of this story at Slashdot.