Banks explore buying Fiserv debit network to dodge fee caps

Several of the nation's largest banks have held preliminary discussions about a joint acquisition of a debit card network owned by financial technology company Fiserv, a move that could allow them to bypass federal caps on transaction fees. According to reports, JPMorgan Chase, Bank of America, Wells Fargo, and PNC Financial Services Group have explored the idea in recent months, though the talks are described as tentative and may not result in a deal.

The banks are seeking a way around the Durbin Amendment, a provision of the 2010 Dodd-Frank Act that limits the fees large banks can charge merchants on debit card transactions. The rule applies to banks with more than $10 billion in assets, but only when transactions are routed through an outside payment network like Visa or Mastercard. If a bank also owns the network processing the transaction, it could be exempt from the fee caps.

The strategic logic was demonstrated by Capital One's acquisition of Discover Financial Services, which gave the bank control of a payment network. Capital One is set to begin migrating its debit cards to that network later this month, where it will not be subject to the federal interchange fee...