Bank of America is to terminate its merchant services partnership with First Data when the ten-year contract expires in June 2020.
The news came within hours of Fiserv acquiring control of First Data, sending its shares downward.
BofA says it expects to incur an impairment charge of about $1.7 billion to $2.1 billion in Q3 2019 due to the termination of the partnership, which started in 2009.
“Payments are at the core of our business, and this announcement is another step forward in our global strategy to provide companies of all sizes an integrated payment offering," says Mark Monaco, head of enterprise payments at Bank of America. "We look forward to investing in our merchant solution and delivering the capabilities our clients need to thrive in an ever-changing payments environment.”
Under the terms, First Data will continue to provide uninterrupted services to the BofA merchant base until 2023.
The split coincides with the end of another big bank/vendor partnership in the US, as JPMorgan Chase ends its four-year collaboration with OnDeck to provide online loans to small businesses. The US bank has brought processing inhouse to offer similar services from its own platform, a decision which sent shares in OnDeck tumbling.