Fiserv Earnings Highlight Embedded Finance and Pay-by-Bank Pacts

Fiserv’s latest third quarter results showed growth in its core point-of-sale solutions — and long-term potential for embedded finance amid new and recently struck partnerships.

CEO Frank Bisignano said during the call that “It is increasingly clear that our position at the intersection of merchant and financial solutions is a strategic advantage … [as] businesses and financial institutions are increasingly interconnected” when it comes to moving money.

The company’s earnings supplementals noted that within Merchant Solutions, adjusted revenues were up 9% to $2.5 billion, with small business sales up 9% from last year, to $1.6 billion.

Clover, the company’s point-of-sale solutions, logged sales growth of 28% and annualized gross payment volume was up 15%, to $311 billion.

Within Financial Solutions the adjusted revenues of $2.4 billion were up 5%, and digital payments were up 5% to $987 million, with banking-related sales ahead by 5% to $636 million.

DoorDash and Walmart Partnerships

Bisignano offered up as examples of that connectivity and embedded options the announcement this morning that, working with DoorDash, Fiserv is the embedded finance application through which DoorDash will offer its delivery contractors what he termed “a full range of financial services.”

“Within a single app, they can get instant access to wages and rewards, as well as deposit accounts, debit cards, and more. Our real-time ledger capability from Finxact manages the transactions and was the key reason why Fiserv was chosen,” adding that “a Fiserv banking client rounded out the solution as a requisite sponsor.”

He also called out last month’s announcement that the company is involved with a proof of concept with Walmart, “where we enabled a real-time pay-by-bank transaction. … [A] growing number of merchants are adding pay-by-bank capability to maximize choice for consumers and the emerging capacity for handling such payments in real time offers advantages for Fiserv, merchants and consumers. This capability will be more widely available next year.”

Additional efforts are in place with Walmart Business, as a referral partner for Clover as a business management platform, “helping Walmart fulfill its goal of helping small businesses and nonprofits to better run their businesses,” Bisignano said.

Within the financial segment, Bisignano said, “We continue to migrate clients to experience digital or XD, our new digital banking solution, as we integrate additional solutions into this unique digital ecosystem, including cash flow central, real-time payments and Clover.”

CFO Robert Hau said on the call that payments volume “was similar to Q2 levels. According to a variety of external macro indicators, overall consumer spending growth is slower than last year, but appears stable at a comfortable pace.”

Within Clover, software-as-a-service (SaaS) penetration increased sequentially by 1 point to 21% in the third quarter, driven by growth in Clover Capital and the Clover SaaS package.

“In Q4, we will be rolling out new vertical software plans for retail and services,” and the firm remains “on track: to see 2026 annualized Clover revenue targets of $4.5 billion.

Zelle transaction growth came in at 35%, and, said the CFO, “We continue to see demand from clients for digital payments products such as FedNow and RTP integrations.”

Management boosted its revenue forecast, on an organic basis, to 16% to 17% for 2024; that range had been 15% to 17% previously.

Investors bid the shares up 1% in intraday trading on Tuesday.

Management also noted on the call that the state of Georgia approved Fiserv’s application for a merchant acquirer limited purpose bank charter.

“This is a special purpose charter that enables optionality for sponsorship for merchant acquiring. It’s important to clarify that Fiserv is not becoming a bank. Fiserv will not open branches, take deposits or write loans as traditional banks do,” Hau said.