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Payment processor Fiserv Inc. faces a lawsuit over allegations it misled investors over how it handled migrating merchants to Clover from its now retired Payeezy payment gateway, according to Labaton Keller Sucharow LLP, the New York City-based law firm representing the plaintiff, the City of Hollywood Police Officers’ Retirement System in Florida.
Filed Thursday, the suit claims that the Milwaukee-based company “misled investors” by failing to disclose that, because of cost issues and other problems, it was forcing Payeezy platform merchants to move to the Clover platform and that Clover’s revenue growth and gross payment volume, which is the total monetary value of transactions processed through Clover, were temporary and unsustainable because of the forced conversions. Another claim is that a number of former Payeezy merchants switched to competitors and that, as a result of this attrition, Clover’s gross payment volume was slowing.
Fiserv, in a statement to Digital Transactions News, disagrees with the claims and says it “will vigorously defend itself in the lawsuit.”
The suit was prompted, in part, by Fiserv’s latest earnings results that saw a lower forecast for organic revenue growth to 10% from the earlier outlook of 10% to 12%. It also reported first-quarter volume growth for Clover of 8%, compared with 14% in the 2024 fourth quarter. Despite the drop-off, Fiserv projected Clover revenue growth could be 27% higher than earlier.
During a July 23 earnings call, Fiserv executives said issues in the “macro economy” influenced its revised outlook, as did some new product delays.
The Fiserv moves, the lawsuit claims, affected the processor’s outlook for future Clover growth. Fiserv attributed the slowing Clover growth to lower 2025 transaction volumes from Payeezy merchants who had converted to Clover, the suit says. But the plaintiffs claim Fiserv failed to disclose that spread between the revenue growth and GPV growth of 8% was “largely due to the loss of transaction volumes from former Payeezy merchants who left Clover for competing solutions.”
Fiserv’s stock price dropped has dropped. Its closing price on July 22, the day before its most recent earnings report, was $165.82 according to Google Finance. It fell to $131.01 on July 23, but has since recovered somewhat to an opening price of $140.99 Friday.
