Monday , November 23, 2020

Fiserv Tugs the Curtain Back a Bit on Early Gains From Its Big First Data Acquisition

Six months after closing on its $22 billion acquisition of First Data Corp., Fiserv Inc. on Tuesday dropped some tantalizing hints about early benefits the deal has generated for the combined company. First Data’s Clover app-based platform for merchant checkouts, for example, saw its gross payment volume grow fully 40% in 2019, Fiserv chief executive Jeff Yabuki told analysts on a conference call. He did not reveal the absolute numbers, but clearly singled out the POS device unit as a standout.

“It was a stellar performance,” Yabuki said of Clover as part of a discussion of Fiserv’s fourth-quarter results. “Not only is Clover an attractive vehicle, but one sees better [merchant] retention and happier clients.”

But the honor roll for First Data products didn’t end there. In the important integrated-payments market, the roster of connected independent software vendor partners increased 25% for the year, while ISVs added 25,000 new merchant locations for the company, Fiserv reported. Again, the company did not reveal the actual number of partners.

And in another key development, Yabuki reported some 80 e-commerce retail brands joined Fiserv’s platform for processing, a gain Yabuki credited to First Data and Frank Bisignano, formerly First Data’s chief executive and now president and chief operating officer of what both he and Yabuki referred to as “the new Fiserv.” Yabuki attributed the e-commerce client gains to “a continuation of a strategy Frank and his team started, and we continue to make it a high priority,” he told the analysts.

One mop-up operation left over from the massive acquisition is apparently on track, as Bisignano reported Fiserv is working closely with Bank of America Corp. to dissolve a merchant-acquiring joint venture, Bank of America Merchant Services, that had been an unresolved question in the immediate wake of the merger. The formal separation is set for June, Bisignano told analysts on the call.

All in all, Yabuki said, the First Data acquisition, which was announced Jan. 16 and closed July 29, made 2019 “a watershed year for Fiserv.” He went on to laud the deal as a “market-defining transaction.”

Clearly, First Data has become the tail wagging the dog, accounting for 61% of Fiserv’s $3.67 billion of internal revenue in the fourth quarter. The unit is also growing slightly faster than other operations at the company, with 6% fourth-quarter revenue growth compared to 5% for payments outside of First Data and nil growth for financial services. Fiserv is a major provider of core account processing services for financial institutions and also provides third-party bank services, such as peer-to-peer payments processing for both the bank-owned Zelle service and for Fiserv’s proprietary Popmoney product.

All told, Fiserv ended 2019 with $14.42 billion in internal revenue, a measure that adjusts for currency impact and acquisitions and divestitures. That volume represents a 6% rise over 2018 on a like-for-like basis. “We’ve made substantial progress against our goals,” Yabuki said, adding that he is “even more bullish” about First Data than he was at the time the acquisition was announced.

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