The proposed merger of Fiserv Inc. and mega-processor First Data Corp. has huge implications for many parts of the payments industry. But the deal, if consummated as planned, could have an especially large effect on the U.S. debit card market.
First Data owns the Star electronic funds network, while Fiserv owns the rival Accel network. The planned merger would give Brookfield, Wis.-based Fiserv, as the successor company will be known, a commanding presence in the rapidly changing debit market.
Star, Accel, and their few remaining direct competitors originally served the ATM market and then expanded into providing PIN-based debit card acceptance at grocery stores and a few other merchant categories. But Mastercard and Visa Inc. also entered the PIN-debit market, and they effectively locked up the market for signature-based debit cards in the 1990s. In recent years, the surviving PIN-debit networks have been broadening their range of services, including by offering signature and PINless transactions, to enhance their appeal to merchants and debit card issuers.