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Bank Of America Corp. has widened its already big lead as the nation's largest debit
card processor by purchasing Merrill Lynch & Co. Inc., Brian Riley, research director in
TowerGroup Inc.'s Bank Cards practice, tells ATM&Debit News.
BofA announced Monday it purchased Merrill Lynch for $50 billion in an all-stock
transaction.
With the addition of Merrill Lynch's $13 billion in annual debit card processing, Charlotte,
N.C.-based BofA will process $123 billion annually in debit card transactions, Riley says.
Even without adding Merrill Lynch's debit card processing numbers, BofA was the clear
leader in that area, Riley says. This year, BofA was projected to process $110 billion in debit card transactions, followed by Wells Fargo &Co. at $56 billion, Wachovia Bank at $40 billion, JPMorgan Chase&Co. at $35 billion and
Citibank at $12 billion, he says.
TowerGroup, the Needham, Mass.-based consultancy, derived its numbers by studying the 5 banks' annual and quarterly reports, perusing U.S. Securities and Exchange Commission filings and developing estimates internally.
Merrill Lynch issues a number of credit and debit cards, but its most popular is
Merrill Lynch Access, a deferred debit card for clients who have a minimum of $500,000 in a Merrill's cash management account.
Clients use the card to pay for purchases like a standard debit card. However, unlike a standard debit card where purchases are immediately subtracted from the cardholder's checking account, Merrill Lynch withdraws the amount owed from clients' cash management account at the end of each month, Riley says.
"They [Merrill] provide clients an interest- free line of credit," he says. "There are
two things you can take away from BofA's purchase of Merrill Lynch. They now have a
lot high-net worth clients and, because the bank already processes debit card transactions for Merrill Lynch, it will be easy for Bank of America to integrate Merrill's debit card onto the bank's processing platform."
Both BofA and Merrill Lynch issue Visa branded credit and debit cards.
