On January 12, Fiserv announced that it filed an application with the state of Georgia for a merchant acquirer limited purpose bank (MALPB) charter. This application is a seismic development and positive sign for those in the United States pushing for more direct merchant acquirer access to the payment card networks.

A MALPB charter would allow a company to offer merchant payment processing services without a sponsoring partner bank, including:

  • Obtaining membership in card networks;
  • Signing up and underwriting merchants to accept network branded cards;
  • Facilitating the clearing and settlement of transactions through a card network; and
  • Providing access to, and sponsoring participation in, card networks to the MALPB’s affiliates, customers, or customers of affiliates.

Our Take:

Companies seeking to apply for the charter, which was enacted almost 12 years ago, were not able to take advantage of its benefits because the card networks would not allow those companies to become direct participants. Thus, no MALPB has ever opened in Georgia. However, there are rumblings in the industry that at least one large card network is now willing to consider nonbank or fintech acquirers in possession of this special purpose charter, which would open up this as a viable opportunity for approvable applicants.

We have already had a number of talks with other payment and fintech companies looking to follow suit, and are expecting an increase in applications for this unique charter by companies that are looking to reduce reliance on sponsoring bank arrangements.

Troutman Pepper is a leader in de novo charter applications that has helped form all new bank charters in the state of Georgia since 2010. Troutman Pepper and Troutman Pepper Strategies also assisted in drafting the law that enacted the MALPB charter and in the advocacy efforts to enact it, and thus are well-positioned to assist payment and fintech companies looking to pursue this charter.

Troutman Pepper’s Financial Services Group provides comprehensive support to all types of financial services businesses in today’s challenging and ever-changing environment. Our team includes more than 200 attorneys who regularly advise national, regional, and community banks, financial technology companies, payments companies, consumer and commercial lenders, and a wide variety of other financial services businesses on the most crucial aspects of their business, from structuring major transactions to dealing with regulatory scrutiny and litigation.

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Photo of Keith J. Barnett Keith J. Barnett

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts…

Keith’s experience representing clients in the financial services industry as a litigation, compliance, regulatory, investigations (internal and regulatory), and enforcement attorney spans 20 years. Keith represents clients against government regulators (CFPB, FTC, SEC, CFTC), industry regulators (FINRA), and private litigants in federal courts, state courts, and before arbitration and administrative law panels in the financial services industry.

Photo of Carlin McCrory Carlin McCrory

A seasoned regulatory and compliance attorney, Carlin brings extensive experience representing financial institutions, fintechs, lenders, payment processors, neobanks, virtual currency companies, and mortgage servicers.

Photo of James Stevens James Stevens

James is the co-leader of the firm’s Financial Services Industry Group. He has significant experience working with clients across the entire financial services sector, regularly working with public and private companies such as banks, neobanks, marketplace lenders, and other fintech and financial services…

James is the co-leader of the firm’s Financial Services Industry Group. He has significant experience working with clients across the entire financial services sector, regularly working with public and private companies such as banks, neobanks, marketplace lenders, and other fintech and financial services providers and partners.

Photo of Samer Roshdy Samer Roshdy

Samer represents public and private companies on both corporate and financial services regulatory compliance matters. With a significant portion of his practice devoted to representing clients in the financial services industry, Samer routinely advises depository institutions, innovative fintech companies, and other nonbank financial…

Samer represents public and private companies on both corporate and financial services regulatory compliance matters. With a significant portion of his practice devoted to representing clients in the financial services industry, Samer routinely advises depository institutions, innovative fintech companies, and other nonbank financial services companies.

Photo of Brad Resweber Brad Resweber

Brad represents public and private companies in all aspects of corporate and securities transactions, including mergers and acquisitions, securities offerings, SEC reporting, corporate governance and compliance matters, capital raising, business entity formations, joint ventures, and general corporate matters.