of WSJ is reporting that major banks (JPMorgan, Bank of America) are exploring acquiring STAR and Accel. STAR and Accel are owned by Fiserv and are two of the largest debit card processors. Major banks are interested in making this purchase because of the Durbin Amendment, which limits the debit interchange fee that can be charged to $0.22 + 0.05%. However, there are two engravings:
- Smaller banks and credit unions with assets under $10 billion are exempt
- Exchange is limited only when transactions are routed through third-party networks
If a big bank were to buy STAR and Accel, they could route these transactions through their network and the cap would no longer apply. This is similar to movement Capital One acquired Discoveras that deal also included the PULSE debit network. Sunrise Banks has launched rewards debit cards (such as Southwest Debit Card) and are not subject to caps either. The current administration has shown no interest in blocking these types of acquisitions, although it will likely face significant pressure from banks that were unwilling or unable to purchase a debit processing network.
