Payments

Fiserv buys First Data for $22 billion, takes aim at Square

  • More consolidation continues in the payments industry.
  • This tie-up could actually provide more opportunity to smaller fintechs.
close

Email a Friend

Fiserv buys First Data for $22 billion, takes aim at Square

Fiserv announced it is acquiring First Data in a $22 billion all stock deal.

Why the tie-up?: Both firms provide a lot of technology to banks and financial institutions, but analysts believe it is trends in the payments industry that are behind this merger. Fiserv processes credit card transactions for banks, while First Data handles merchants. The combined entity would mean that the firm would control both sides of the transaction and could cross-sell technology and services to their clients.

Square’s looming presence: The growing number of payment options means merchants have more choices. Square, in particular, with its point of sale product, has been successful luring away SMB clients. In Q3 of 2018, Square had a gross payment volume of $22.5 billion. To put that in perspective, First Data processed $2.1 trillion in the US in all of 2017.

First Data has a cloud based point-of-sale payment system called Clover that it has positioned in direct competition with Square.

“There is no question that Clover is in a heavyweight fight to win the title in terms of cloud-based point of sale systems,” First Data CEO Frank Bigsignano told the WSJ.

Bigger players may mean opportunities for smaller ones: Fiserv-First Data will be a massive company with about 8000 employees and thousands of clients. Consolidation in core banking providers means fewer choices for customers.

While the combined company has even more resources, it may mean that product development and responsiveness to clients slows down. Many smaller financial institutions are dependent upon their core banking providers for technology.

“Many community banks and credit unions rely on these large banktech firms to compete with fintech and the largest banks,” Alex Jimenez, vice president and senior strategist at Zions Bancorp told American Banker. “The merger could impact the pace and their ability to be swift.”

So while Goliath becomes bigger and stronger, David could become more appealing to smaller financial institutions like community banks.

Image source

0 comments on “Fiserv buys First Data for $22 billion, takes aim at Square”

Payments, Podcasts

Payoneer’s Charles Rosenblatt: ‘We found a way to play on both sides of the market’

  • Charles Rosenblatt has a long career in payments.
  • Joining Payoneer recently as chief strategy officer, he joins us to discuss the company's progress and future plans.
Zachary Miller | September 14, 2020
Payments

Ant Group files to go public in what could be the largest IPO in history

  • China's Ant Group has filed for a massive dual listing in Shanghai and Hong Kong.
  • The payments firm has expanding into banking, insurance and investing via third parties.
Zoe Murphy | August 26, 2020
Payments, Podcasts

WePay’s Jennifer Parker: ‘We’re seeing inspiring early pivots with software firms and marketplaces’

  • WePay provides payment APIs to ISVs and marketplaces.
  • CRO Jennifer Parker joins us on the podcast to discuss initiatives she's leading during the crisis.
Zachary Miller | August 06, 2020
Payments, Podcasts

Afterpay’s Laura Nadler on the new loyalty program and expansion plans in the U.S.

  • Afterpay is one of the fastest growing buy now, pay later firms in the world.
  • The US CFO joins us to talk about levers for that growth and the fintech's priorities for 2020 and beyond.
Zachary Miller | August 04, 2020
Payments

Mastercard partners with Microsoft to accelerate innovation across payments

  • Financial inclusion is a big theme for both firms.
  • Microsoft's Azure cloud environment will provide the infrastructure for Mastercard's partners' inclusion products and services.
Zoe Murphy | July 28, 2020
More Articles