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August 21st 2019

The BAMS Split – The Questions That Merchants Need Answering

For the merchant community, any significant changes in the payments industry can be concerning. With Fiserv – First Data, prior to its purchase by Fiserv for $22 billion earlier in 2019 – and Bank of America’s recently announced Bank of America Merchant Services (BAMS) breakup, many merchants will now be anxious about the future of their card acceptance.


With this news comes a number of opportunities and potential challenges that merchants need to be aware of. In our upcoming webinar, we explore five key questions that need to be answered before BAMS’s merchant clients can develop a long-term strategy.

1. Who gets the kids?

BAMS’s clients will be split according to its ownership structure of 51% Fiserv and 49% Bank of America. However, BAMS clients are yet to learn what this vague plan means for their businesses.

Will BAMS’s client base be split with Fiserv by number of transactions, dollar spend or some other criteria?

How will they decide who remains on the Fiserv platform and who will remain with Bank of America?

Is there anything merchants can do to define their own destiny?

2. What are the practical considerations for merchants?

The split will officially take place in June 2020, with Bank of America merchants remaining on the Fiserv platform until June 2023.

It’s important that merchants begin assessing the practical impact of moving to a different platform: and the largest challenge will be integrating their front-end solution with a new acquiring platform.

Merchants also need to consider the impacts on areas such as reconciliation, relationship management, settlement timescales and reporting. Those clients who stay with Fiserv will of course remain on the ClientLine reporting tool, but Bank of America customers cannot rely on this beyond 2023.

Finally, there is potential for a large financial impact – the cost of changing processors can often be as high as six-figures. Overall, a platform conversion can be a huge undertaking for any merchant: but could merchants who stay with Fiserv miss out on a new, state of the art platform?

Of course, the majority of this disruption will depend on what Bank of America does next, and the future is uncertain for merchants at this stage.

3. What will Bank of America do?

There are two main approaches that Bank of America can take if it wishes to remain in the merchant processing industry: build or buy.

Building a new processing platform would be a significant undertaking, with investment of more than $1 billion likely to be required. There is no clear precedent for this. Chase split from First Data in 2008, but already had its Paymentech platform as part of JPMorgan’s acquisition of Bank One for $58 billion in 2004. Chase also has a competitive differentiator in the form of ChaseNet – its “on-us” service that allows transactions from Chase cardholders to be settled directly by Chase, reducing network fees. Will Bank of America be looking at a similar proposition?

On the other hand, if Bank of America is planning to purchase an existing merchant processor, who will it target? Alternatively, would a joint venture with another acquiring bank be a possibility?

4. What about Clover?

Clover is an all-in-one point of sale payments system targeted largely at smaller merchants. Clover is a Fiserv product that should be available to Bank of America customers until 2023. What would be the impact for merchants if Clover is no longer available?

5. How does this relate to the FIS, Fiserv and Global Payments deals?

The BAMS split is far from the only recent major market change in the U.S. merchant processing industry. We have also seen FIS purchase Worldpay; Fiserv purchase First Data; and Global Payments purchase TSYS.

The potential of an “on-us” proposition sounds attractive for merchants, but could FIS and Fiserv – who both own proprietary debit networks – offer something even more attractive? When the dust settles, will the BAMS breakup decrease or increase competition in the U.S. merchant processing industry?