Big Banks Are Considering a Deal to Get Around Debit Card Fee Caps. This Fintech Stock is Rising on the News

Big banks are weighing a deal that would help them get around a law limiting the fees they can charge on debit card transactions, The Wall Street Journal reported.

Big banks have reportedly been looking to acquire a payments processing network from Fiserv, and the financial technology firm’s stock is getting a boost Tuesday on the news.

Shares of Fiserv (FISV) were up 4% in recent trading after The Wall Street Journal reported late Monday that banks including JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC) and PNC Financial Services (PNC) have weighed making an offer for a network owned by Fiserv.

Acquiring their own payment processing network could allow the banks to bypass limits on the fees they charge merchants to process debit card transactions, which banks have said would pay for things like expanded rewards programs for debit cards.

The report noted that some of the banks have already dropped the idea of pursuing a deal, likely due to concerns over pushback from regulators or merchants that could come as a result of such a deal.

A deal to sell part of its business or be acquired by a big bank could help lift Fiserv’s stock out of a rough stretch, as shares are down about 20% since the start of the year and some 70% in the last 12 months.

The banks are reportedly looking to get around the Durbin Amendment, part of the 2010 Dodd-Frank Act, which caps debit card transaction fees but also has an exception for banks that own their own payment network.

The deal would mirror Capital One’s (COF) acquisition of Discover Financial, and could help banks avoid billions in so-called “swipe fees” annually, while critics could say such a...