It took Fiserv roughly three and a half years to complete its acquisition of First Data, but the synergies and surprises continue to emerge.
This, as the financial services giant said the opportunities to help merchants embrace commerce and payments across all channels are — in the words of CEO Frank Bisignano — “bigger than we ever thought.”
He said that the combined entity is more than the sum of its parts. “You see things that we are doing [today] that neither company did before,” Bisignano told analysts on the conference call to discuss earnings.
Clover, which helps merchants accept payments at the point of sale and Carat, billed as an operating system for merchants’ commerce efforts, helped drive Fiserv’s merchant acceptance revenues above pre-pandemic levels.
Investors cheered the results, bidding Fiserv’s stock up more than 7% intraday.
Supplemental materials show that organic revenue growth in the Merchant Acceptance segment was 9% in the quarter, to $1.9 billion. The company saw a 23% growth in Clover revenues as compared to last year. The Clover annualized GPV stood at $232 billion.
Carat saw 15% sales growth in the most recent period. And overall, the company said, the fourth quarter was marked by a 6% gain in merchant volumes and a 3% gain in transaction volumes.
Organic growth in the Payments and Network operations was 10%. The company noted in its materials that active credit accounts grew by 17% in the quarter.
Zelle transactions were up 27%.
During the conference call with analysts to discuss earnings, Bisignano said that in addition to the Clover and Carat operating systems momentum, “newer products such as data as a service, pay by Bank Disbursement and EBT online widen the value proposition to clients and bolster our strong positioning in card and non-card payments.”
Greater than the Sum of Its Parts
Bisignano said synergies are being realized between acquiring and core banking, core banking and embedded finance and current issuing services, spanning several verticals and noted the “power of the franchise coming together.” Bisignano pointed to Fiserv’s acquisition late last year of commerce platform BentoBox which has helped make further inroads in the restaurant sector.
International growth rates are double that of what’s been seen in the U.S., and the fastest-growing region for Fiserv has been the LatAm region, especially within the merchant space in Brazil and Argentina.
In discussing Clover’s potential, he said during the call, “we’ve begun migrating merchants from our existing internet gateway to a new Clover gateway where they can more easily access a full suite of value added services. This positions Clover to compete more for card not present business this year.”
Chief Financial Officer Robert Hau said that the company’s Clover active merchant accounts were up 9% year on year and said Fiserv continues to see a rebound in its FinTech segment.
“We’re on track for $3.5 billion in Clover revenue by 2025,” he said, adding that “Clover Connect for ISVs continues to post very strong revenue growth and added 48 ISV partners in the quarter.” In the meantime, management said, the firm is continuing to build out its direct sales channel. The merchant business could be worth as much as $10 billion in 2025.
And with some insight into 2023 trends, management stated that overall January volume growth was stronger than in December. Management expects organic revenue growth of 7% to 9%, even with the baseline assumption of a mild recession ahead.
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