Fiserv Granted Special Banking Charter in Georgia

The Georgia Department of Banking and Finance has approved Fiserv’s application for a special banking charter, according to a financial bulletin released on Friday. This development gives the Wisconsin-based payment processing giant direct access to credit card networks, eliminating the need for bank partnerships to handle transactions. The state department approved the charter on September 27.

Fiserv, headquartered in Brookfield, Wisconsin, is a major player in the payment services industry, providing transaction processing services to merchants. The company had applied for a merchant acquirer limited-purpose bank charter, which would allow it to authorise, settle, and clear payment transactions directly for its clients. Fiserv first disclosed its application for the charter back in January.

On Friday, Fiserv announced that it had received “conditional approval” for the charter from the Georgia banking department, allowing it to proceed with setting up the necessary infrastructure to acquire payments directly. The company expects to begin using the new charter by 2025, subject to completing certain requirements.

In a statement, Fiserv emphasised that it does not intend to transform into a traditional bank or regional financial institution. Instead, the company will continue to partner with banks while taking advantage of its new capability to serve as an acquiring sponsor for smaller financial institutions.

While Visa declined to comment on its position regarding Fiserv’s new status, Mastercard expressed openness, saying it is reviewing the implications of the charter. “We have not yet made a decision regarding the potential approval of such entities within our network,” a Mastercard spokesperson stated.

Fiserv’s application was made in Georgia, where it has a significant presence due to its major office in Alpharetta. The company is the second business to seek the state’s special merchant acquirer bank charter since it was introduced in 2012. The first was Credorax, an Israeli firm now known as Finaro, which was later acquired by Shift4, a digital payments company. Although Credorax received approval from Georgia’s banking regulators, it struggled to secure partnerships with card networks like Visa and Mastercard, according to James Stevens, a financial services attorney at Troutman Pepper.

Securing this special charter is a complex process, requiring both state and federal approval, Stevens explained. The card networks rely on banks to manage risks, and this trust is typically extended to businesses that have cleared regulatory hurdles. Stevens suggested that Fiserv’s successful application could pave the way for other payment companies to pursue similar privileges. “We might see a wave of applications following this,” he said.

Fiserv CEO Frank Bisignano had previously commented on the company’s pursuit of the charter, emphasising that it was not intended to compete with its financial institution partners. During an earnings call in February, Bisignano noted that Fiserv’s ability to sponsor smaller banks could bring valuable benefits, especially for those that lack direct sponsorship capabilities.

The special charter in Georgia came about following efforts by the payments industry to streamline access to card networks. Previously, payments companies had to partner with banks to interface with the networks, but this charter simplifies that process for merchant acquirers. However, despite the advantages, few companies have opted to undergo the regulatory challenges to obtain such a status, according to Stevens.

With Fiserv now leading the way, other payments companies may reconsider their strategies in light of the new opportunities this special charter offers.