Bank of America has notified Concord EFS it does not plan to continue its participation in the Star network.
Bank of America was the only sizable owner of Star Systems that didn't sign a long-term network participation contract when Star was acquired by Concord in February. It will continue to use Concord's ATM processing services.
Bank of America has been "transitioning" to Visa U.S.A.'s Interlink online debit network, said Brad Russell, a spokesman for Charlotte, N.C.-based BofA. "We made a business decision."
Moving to Interlink, he said, helps BofA establish "a second national payments network, which will create competition for merchants and consumers."
"For the past several years, Bank of America has been executing a strategy that seeks to minimize network identities in favor of the Bank of America brand," Ronald Congemi, president of Star Systems, said in a statement. "We're pleased they will continue as a Concord customer for other processing services."
Concord will continue to provide ATM processing services to approximately 1,100 Bank of America ATMs, plus point of sale debit gateway processing to selected Bank of America merchants.
"Our financial institution relationships go beyond just network access, and we look forward to working with Bank of America even when they are no longer part of the network," said Edward A. Labry III, president of Memphis, Tenn.-based Concord. He doesn't expect many other banks will desert the Star network. "On the ATM side, Star has higher transaction approval rates, better interchange, and more efficient back-room dispute processing than Visa/Plus. On the point of sale side, Star offers more locations for PIN-secured debit than Interlink."
"I think Bank of America has made the right move for Bank of America," said Charles Pedersen, executive vice president at Union Bank, and a member of the Star Advisory Board. "But most financial institutions recognize the benefits of belonging to a network that knows that the best route to long-term profitability is highly satisfied clients. The for-profit network model is about leveraging capital for the greater good."