Large lenders explore acquisition of payments infrastructure
Fiserv (NASDAQ:FISV) has been in discussions with several leading US banks, including JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC), regarding the possible sale of its debit payments network business, according to a source familiar with the matter.
The proposed transaction comes as the financial technology group continues efforts to improve performance following a challenging period that included a sharp decline in its market valuation and significant leadership changes.
Additional banks reportedly involved
The source said Wells Fargo (NYSE:WFC) and PNC Financial Services Group (NYSE:PNC) have also participated in discussions over recent months.
However, no agreement has been reached, and the negotiations remain preliminary. The source, who requested anonymity because the talks are confidential, noted that the discussions could still end without a transaction.
STAR Network serves millions of cardholders
At the centre of the discussions is Fiserv’s STAR Network, which provides the infrastructure used to process debit card, ATM and e-commerce transactions between banks, merchants and consumers.
According to the company’s website, the network supports more than 115 million debit cardholders through cards issued by over 2,800 financial institutions.
Regulatory environment could support a transaction
Any potential acquisition would coincide with a more favourable regulatory backdrop that could encourage major US banks to expand their payments businesses.
The Wall Street Journal, which first reported the discussions, said ownership of the network could allow participating banks to avoid certain federal limits on debit-card interchange fees.
Nevertheless, the source said some parties that reviewed the opportunity have already stepped back over concerns that such a deal could face opposition from lawmakers, regulators and merchant groups.
Shares rise despite year-to-date losses
Although Fiserv shares have fallen around 23% since the start of the year, the stock gained 4.4% in after-hours trading on Monday following reports of the discussions.