July 29th 2019
Fiserv, First Data and BAMS - Consolidation and Break-Ups Rock the U.S. Payments Industry
In a landmark day for the U.S. payments industry, Fiserv has finalized its $22 billion acquisition of First Data, who itself has announced that it is discontinuing its merchant processing joint venture – Bank of America Merchant Services (BAMS) – upon its contract expiry in June 2020.
The new entity, which will be branded as Fiserv, becomes a payments industry behemoth providing a range of services including both merchant and issuer processing, and maintains ownership of both single and dual message network rails. Meanwhile, BAMS’s client base will be assigned to the two parties according to its ownership structure of 51% Fiserv to 49% Bank of America.
BAMS was founded in 2009 and, according to Nilson Report figures, is currently the second largest processor of Visa and Mastercard transactions in the U.S. – processing $685 billion in 2018. First Data has its own direct acquiring relationships, as well as joint ventures and alliances with other leading banks: including Wells Fargo, Citi, PNC and SunTrust. Overall, CMSPI estimates that First Data related businesses processed 38% of all U.S. card spend in 2018.
"These changes will inevitably cause a lot of disruption in the processing industry. All merchants currently contracted to BAMS or any First Data related entity need to make sure they are aware of exactly how their processing arrangements will be impacted. At CMSPI, we will be working with our clients to ensure that their payments arrangements are optimized as the supply chain changes."
Alistair Matthewson - VP of Technical Consultancy