Global Payments Acquires WorldPay & Debit Interchange Cap Debates

Welcome to Today in Payments, I’m your host, Patti Murphy, here with your weekly dose of payments notes.

Global Payments plans to acquire the merchant services company Worldpay for $24.25 billion, including $1.55 billion in tax assets, from its two owners, Fidelity National Information Services and private equity firm GTCR.

In an asset swap, banking technology services company FIS also announced on Thursday that it expects to buy Global Payments’ issuer business for $13.5 billion, which includes $12 billion plus $1.5 billion in tax assets.

Republicans Pressure Fed on Debit Interchange Caps

A group of 14 Republican lawmakers, led by Representative French Hill, chairman of the House Financial Services Committee, is pressuring the Federal Reserve to reconsider plans to lower the maximum interchange fee that large debit card issuers can charge. They cited this as one of several issues they have with recent Fed actions.

The lawmakers wrote in a letter to Fed Chairman Jay Powell that the proposal would place smaller financial institutions at a “significant competitive disadvantage” because they lack the economies of scale of larger issuers. They argued that the proposal would likely lead banks to increase other account fees to compensate for the lost revenue from debit interchange fees.

They noted that when the Fed initially capped debit interchange fees, it had little effect on lowering consumer prices, contrary to what the Fed and other proponents had anticipated.

The lawmakers also suggested that the Fed failed to adequately account for fraud costs, which disincentivizes banks from investing in fraud prevention since they can no longer cover these costs through debit interchange fees. They believe this proposal should be withdrawn.

The Fed has proposed lowering the base debit interchange rate for the largest banks—those with $10 billion or more in assets—by about a third, to 14.4 cents from 21 cents, and 5 basis points for fraud prevention. The fee cap has not been changed since it was established in 2011, initially set at 21 cents plus 5 basis points, with a 1-cent fraud prevention adjustment.

Additionally, the Fed proposed codifying changes to the rule every other year, without seeking public comment.

When the Fed staff presented the proposal to the Board of Governors, it was not unanimously approved, which is typically the case with staff proposals. Fed Governor Michelle Bowman, who based her opposition on many of the same reasons outlined in the just-sent letter.

It is worth noting that Governor Bowman has been nominated by President Trump for the position of Vice Chair of the Fed Board. In this role, she would play a significant part in setting policies on the supervision and regulation of banks and the payment system.

My assessment is that the rule is unlikely to proceed, at least for now. It is rare for the Fed to approve an initiative without full support from all governors.

Block to Pay $40 Million Penalty to New York Over Lax Oversight of Cash App

Block, the payments technology company that operates Square and the peer-to-peer payment tool Cash App, has agreed to pay a $40 million civil monetary penalty to New York to resolve claims made by the state’s financial services regulator over lax oversight of services. Specifically, New York cited Cash App for not complying with state requirements for anti-money laundering, bank secrecy, and know your customer compliance rules.

Based in California, Block operates in New York under a money transmitter license.

This is not the first time Block has been cited by regulators. In January, the company was fined $55 million by the CFPB and ordered to repay consumers up to $120 million for inadequate security protocols. The agency criticized Block’s investigations of unauthorized transactions as “woefully incomplete,” often directing consumers who reported unauthorized transactions to their banks for reversal, which Block would then deny.

Additionally, it engaged in other questionable practices, such as providing a customer support telephone number that was essentially unresponsive. As part of the agreement with New York, Block was required to thoroughly investigate claims of unauthorized transactions and establish a 24-hour live-person customer service center.

SHAZAM Sheds Merchant Services

Continuing with the topic of debit for a moment... While this isn’t a major news item, it is worth mentioning. Shazam, an Iowa-based EFT network that was the first-ever shared ATM network 50 years ago, has sold its merchant services business to NCMIC Finance Corporation, another Iowa company founded 80 years ago initially to provide malpractice insurance to chiropractors. Nowadays, NCMIC also offers financial and insurance products to medical businesses. It seems likely that merchant services will be included in their offerings. And NCMIC is acquiring Shazam’s merchant sales force along with its portfolio, which speaks to the opportunities presented by the medical sector.

Convenience Drives Mobile Wallet Use and Other Fun Facts

I was intrigued by a recent article on PYMNTS.com titled “Convenience Drives Digital Wallet Use for More than Half of Consumers.” Based on a comprehensive study conducted in August—before the election and tariff wars—it revealed significant differences in payment method preferences between consumers focused on managing their spending and those seeking financial incentives.

For in-store purchases, debit cards and cash are favored by those focused on budgeting and convenience—no surprises there. However, the percentages are interesting: only 14% of debit card users and 20% of cash users cited budget management as their motivating factor.

Conversely, in-store credit card use among the budget-conscious is primarily driven by the desire for cash back or other rewards, with 40% of users citing this as their main reason. Security concerns also influence in-store payment choices, with cash being preferred by those concerned about security.

Online purchasing patterns differ, though budget control remains a common theme. About 14% of online debit card users appreciate the ease of tracking payments. Security is a more significant concern in online transactions, with 8.3% of credit card users citing better security compared to 4.8% of debit card users. Yet, the primary attraction for online credit card use remains rewards, drawing a full third of users.

Digital wallets have become a strong alternative for online convenience among the budget-conscious, with 55% of users citing this reason, significantly outpacing debit and credit card use. Trust in the provider also plays a major role, with PayPal gaining more trust over Google Pay and Apple Pay, possibly due to its longer presence in the market.

That’s all for Today in Payments. Stay tuned for your weekly dose of payments notes.