Four of the largest banks in America have quietly explored acquiring a payment network that could let them dodge federal caps on debit-card swipe fees, a maneuver that, if completed, would shift billions of dollars in costs onto merchants and, ultimately, onto consumers.
JPMorgan, Bank of America, Wells Fargo, and PNC Financial Services Group have held tentative talks in recent months about purchasing a network owned by fintech giant Fiserv, the New York Post reported, citing a Wall Street Journal investigation. The target networks, STAR and Accel, both operated by Fiserv, would give the acquiring banks a legal escape hatch from the Durbin Amendment, the 2010 provision that empowered the Federal Reserve to cap interchange fees for banks holding $10 billion or more in assets.
The loophole is straightforward: under the Durbin Amendment, banks that own the payment network are exempt from the fee cap. Buy the network, own the rails, and the cap disappears.
The Durbin Amendment was tucked into the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Barack Obama in 2010. Its stated purpose was to rein in the interchange fees that large banks charge merchants every time a customer swipes a debit card. The Federal Reserve was handed authority to set those limits, and the rule applies to any bank with at least $10 billion in assets.
Businesses currently pay an average of 34 cents per debit transaction, roughly 0.73% of the total, in interchange fees, the Federal Reserve has reported. Those fractions of a percent add up fast. The Federal Reserve Bank of St. Louis found that U.S. banks collected nearly $66 billion in credit- and debit-card interchange fees last year, a sum that accounts for approximately 11% of their total noninterest income.
That $66 billion figure helps explain why the biggest banks in the country would pursue a deal like this. Interchange fees are not a side business. They are a pillar of bank revenue.
The banks exploring a Fiserv network purchase are not operating without a template. Capital One Financial completed its $50.6 billion acquisition of Discover Financial last year, a deal that handed Capital One its own payment network and the ability to negotiate directly with merchants, free from the Durbin cap.
That transaction signaled to the rest of the industry that owning the network infrastructure is the clearest path to recapturing fee revenue that regulation had curtailed. JPMorgan, Bank of America, Wells Fargo, and PNC appear to have taken notice.
JPMorgan, already the largest bank in the country, has been investing heavily in internal capabilities across multiple business lines. A network acquisition would represent yet another expansion of its financial infrastructure dominance.
The silence from the parties involved is telling. Wells Fargo declined to comment. PNC declined to comment. Fiserv declined to comment. JPMorgan and Bank of America did not immediately respond to requests for comment from the Post.
No named executive has spoken publicly about the discussions. No valuation for the Fiserv-owned networks has been disclosed. No regulatory body, not the Department of Justice, not the Federal Reserve, not the Office of the Comptroller of the Currency, has publicly commented on the talks.
What has surfaced is that some of the banks involved have already decided they are unlikely to move forward. Others remain concerned about the political backlash that would follow from regulators and from the merchant community, which fought hard for the Durbin caps in the first place.
The Durbin Amendment exists because merchants, and by extension, their customers, were bearing the cost of interchange fees that large banks set with little competitive pressure. Every swipe fee gets baked into the price of goods. The consumer never sees a line item, but the cost is there.
If four of the nation's largest banks successfully acquire a payment network and exempt themselves from the fee cap, the immediate beneficiaries are bank shareholders. The immediate losers are small businesses, retailers, and the customers who shop at them.
Banks have long argued that interchange fee caps forced them to reduce consumer perks, free checking accounts, debit-card rewards programs, and that the regulation ultimately hurt the customers it was meant to protect. That argument has some merit on its own terms. But the mechanism under discussion here is not a policy reform or a legislative repeal. It is a structural workaround designed to restore fee revenue without changing the law.
The distinction matters. A bank that lobbies Congress to repeal the Durbin Amendment is making a public argument. A bank that quietly buys a network to render the law irrelevant is making a different kind of move entirely.
Major banks have faced scrutiny before for how they handle fees charged to their own customers. SunTrust Bank's $240 million overdraft fee settlement showed what happens when fee practices cross the line from aggressive to unlawful.
Even if the legal theory is sound, own the network, escape the cap, the political environment is hostile terrain for a deal this visible. The Durbin Amendment has powerful defenders in Congress and among merchant trade groups. Any acquisition that looks like a coordinated effort by the biggest banks in America to neutralize a consumer-protection rule would invite intense scrutiny.
Antitrust questions loom as well. Four direct competitors jointly acquiring a shared piece of payment infrastructure raises obvious concerns about coordination and market power, regardless of how the deal is structured.
The banks reportedly weighing this move understand the risk. That is why some have already stepped back. But the fact that the talks happened at all, and involved institutions as large as JPMorgan and Bank of America, reveals how aggressively the banking industry is searching for ways to reclaim fee revenue lost to regulation.
JPMorgan's legal entanglements in other areas have not slowed its appetite for strategic expansion. A Delaware court recently forced the bank to continue covering a convicted fraudster's legal costs, a bill that has exceeded $70 million, a reminder that the institution's legal exposure extends well beyond payment networks.
The open questions here are substantial. Which specific Fiserv network, STAR, Accel, or both, is the primary target? What price is Fiserv seeking? Which banks remain actively interested, and which have walked away? Has any federal regulator been formally notified?
None of those questions have public answers yet. The talks remain tentative, the participants are silent, and no deal has been announced.
But the intent is clear. The biggest banks in the country looked at a federal regulation designed to protect merchants and consumers, found a structural loophole, and began exploring how to walk through it.
Bank of America, for its part, has shown it knows how to cultivate goodwill with cardholders when it suits the brand, offering free museum access to cardholders over the Fourth of July weekend, for instance. Whether that goodwill survives a coordinated effort to hike swipe fees is another matter.
When the law says you can't charge higher fees, and you respond by buying your way around the law, the problem isn't the regulation. It's the instinct.