In a P2P Play, Fiserv Snaps up CashEdge for $465 Million in Cash

n

The two leading vendors of person-to-person payment services for banks will soon be one in a deal announced late Wednesday by bank processor Fiserv Inc., which plans to buy CashEdge Inc. for $465 million in cash.

n

n

As of March, about 700 financial institutions had agreements to offer Brookfield, Wis.-based Fiserv’s ZashPay P2P service, and it already was live at 500. Meanwhile, about 200 financial institutions were using the Popmoney service from New York City-based CashEdge.

n

n

Fiserv said it was buying CashEdge, which has about 500 clients in all, not just for Popmoney but also for its full list of products that include technology to facilitate account-to-account transfers, account openings, small-business payments and other services.

n

n

“CashEdge provides an attractive suite of solutions to further enable the delivery of a highly differentiated payments experience for financial institutions and their customers, as well as accelerate the coming P2P movement,” Fiserv president and chief executive Jeffery Yabuki said in a statement. “CashEdge brings a strong and knowledgeable team that has a well-deserved reputation for innovative product development and delivery excellence. Importantly, we share a common vision for new payment solutions enabled by a financial institution-centric platform.”

n

n

Popmoney, however, is CashEdge’s most prominent service. Popmoney’s client list is shorter than ZashPay’s, but it has been in the market longer and its average client is bigger, says Beth Robertson, director of payments research at Javelin Strategy and Research. “What it [the deal] creates is a bigger network for Fiserv,” Robertson says. She adds that both companies have similar “business approaches” in which they were looking beyond P2P payments and toward consumer-to-business and business-to-business payments.

n

n

Sanjeev Dheer, CashEdge’s co-founder, chief executive and president, said in a statement that the deal “represents a very natural next step and exciting growth opportunity for our clients, our people, and our products. Additionally, we believe that the payments industry has reached a pivotal point in the evolution of consumer and small-business payments, and the merger of our efforts will significantly enhance our ability to deliver innovative solutions to our financial-institution clients.”

n

n

Both Fiserv and CashEdge have been striking P2P deals with major industry players such as Visa Inc., which is offering both services. But the recent announcement by Bank of America Corp., Wells Fargo & Co., and JPMorgan Chase & Co. that they would offer a joint P2P service called clearXchange further heightened competition in the P2P market. ClearXchange will be available at first only to customers of the three banks, but the owners plan to expand it. The debut of clearXchange could have given Fiserv and CashEdge another reason to join forces as they and clearXchange’s owners vie for clients. “I think what they’re trying to do is fortify their position in the market and [show] they have something that is meaningful and there is no need to go to a bank-developed solution,” says Robertson.

n

n

Fiserv has proven to be aggressively acquisitive in recent months. In March, it bought three companies in a 24-hour period, including Atlanta-based mobile-technology vendor Mobile Commerce Ltd., known as M-Com.

n

n

Fiserv said it expects to close the CashEdge deal by September, subject to regulatory approvals.