Georgia’s special purpose banking charter has another taker, according to a consultant and a Georgia state official.
The payments processing giant Fiserv made waves when the company acknowledged that it applied for the special charter in January, 2024. The state approved the company’s application on a conditional basis on Oct. 4.
Bo Fears, spokesperson for the Georgia Department of Banking and Finance — which grants the charter — confirmed last week that the agency is considering one other applicant. Fears declined to disclose the applicant company’s name, or when the application was filed.
The other applicant is “a large payment processing company,” said James Stevens, an attorney with the law firm Troutman Pepper, although he declined to share the company’s name.
The charter, which is known as a merchant acquirer limited purpose banks charter, gives the companies the right to authorize, settle and clear payment transactions for merchants.
Milwaukee-based Fiserv can now apply for “direct acceptance into the card networks and complete other administrative tasks required to establish” the charter, the company said in an Oct. 4 statement.
Fiserv, which also has an office in Alpharetta, Georgia, said at the time that it would start using the charter some time this year.
A company spokesperson did not respond to a request for comment asking for further details of its plan.
The charter will give the company the power to undercut competitors on price because it won’t have to partner with banks, or share revenue with them, consultants said.
When Georgia’s banking department approved Fiserv’s application for the special charter, consultants said the approval could open the floodgates for further applicants, but so far that flood has proved to be a mere trickle.
Participation from credit card networks might be part of the problem, Stevens said. While those networks can’t directly derail an application for the special charter, the networks can refuse to work with any company that is approved, he said.
“What we are hearing is that the card networks are not as welcoming as the Georgia Department of Banking and Finance,” Stevens said.
Spokespeople for Mastercard and three other major credit card networks, Visa, Discover and American Express, did not respond to requests for further comment last week.
An Israeli business once known as Credorax — and later called Finaro before being acquired by Shift4 in 2023 — was the first to receive the special banking charter a decade ago, but it was unable to use it because card networks refused to work with the company, said Michele Alt, a partner at the financial advisory firm the Klaros Group.
“That experience was not inspiring,” she said.
As a large and established company, Fiserv has an advantage over smaller competitors, which may be why card networks are more willing to work with the processing firm, she said.
“This is not the right charter for a complete startup,” Alt said.
Tony DeSanctis, a senior director for the consulting firm Cornerstone Advisors, also noted that Fiserv has a presence in Georgia and already has the regulatory approval to work in the state.
Applying for the charter is “probably a larger lift if you are not already in the state,” he said.
