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

Zuora updates its platform with ‘unified monetization’

  • The new tool lets merchants package a one-time purchase and a recurring purchase within a single offering.
  • Unified monetization could help Zuora appeal to companies that rely mostly on one-time purchases for their revenue stream, but could see subscription offerings as a way to expand.
Rivka Abramson | October 04, 2021
Payments

Trustly adds instant payouts to US offerings

  • Trustly's offering, in partnership with Cross River Bank, allows businesses to complete near-instant disbursement of funds through its platform.
  • Industries that can benefit from the offering include retail, marketplace, insurance, and sports betting companies, says Trustly.
Subboh Jaffery | October 01, 2021
Payments

The payments space is getting closer to really serving B2B

  • B2B payments is a massive field that still hasn't seen a single player make a huge mark.
  • That's changing as a new class of fintechs set their sights on the space.
Ismail Umar | September 20, 2021
Payments

‘E-commerce subscriptions are about stability and predictability for consumers’: Behind Recharge’s recent growth

  • As more consumers started subscribing to various purchases during the pandemic, Recharge saw its own growth in revenue.
  • But are subscription services enough to stand on as a payments company?
Rivka Abramson | September 15, 2021
Payments, Sponsored

Gig workers are paving the future of payments

  • The gig economy is here to stay, and it's growing across the globe.
  • These are the four major trends shifting the payments space.
Nium | September 08, 2021
More Articles