Payments processing giant Fiserv is tapping recently acquired fintech units to spur more business, particularly among small and mid-sized companies, and will egg that trend on through a new partnership with rival PayPal.
Executives at suburban Milwaukee-based Fiserv said Tuesday the company's profitable first-quarter included a fast-growing contribution from its Clover unit, Fiserv's cloud-based point-of-sale platform that caters to small and mid-sized businesses (SMBs). Clover's payment volume jumped 36% year-over-year on an annualized basis, and Fiserv doesn't expect that kind of growth to be transitory.
"We do think the growth rate of Clover is quite sustainable," Chief Financial Officer Bob Hau told analysts on a conference call to discuss the first-quarter results. He noted the Clover unit's volumes have been growing about 25% to 40% on a quarterly basis, aside from a slowdown last year due to the impact of the COVID-19 pandemic. Clover was acquired in Fiserv's big $22 billion purchase of First Data in 2019.
The company also benefits from a trio of smaller acquisitions over the past six months that have expanded its payment capabilities across its services. These deals include the acquisitions of Ondot; Pineapple Payments; and Radius8.
During the call, Fiserv CEO Frank Bisignano said the company is committed to a capital allocation strategy that keeps the company hunting for more acquisitions, among other types of investments. Nonetheless, he did not clearly answer an analyst's question on whether the company might take on bigger purchases.
Fiserv also announced Tuesday it is entering a new partnership with PayPal, a company that is a Fiserv competitor in some payments areas. The new tie will give Fiserv customers additional ways to accept payments, in particular giving them contactless options as consumers begin to resume in-person shopping, dining and entertainment activities.
"With consumer preference shifting towards touch-free interactions, it's critical that businesses are able to connect physical and digital commerce," Devin McGranahan, Fiserv's head of global business solutions, said in a joint release with PayPal.
Through the new partnership, Fiserv will enable SMBs that use Clover equipment and larger businesses on a different platform to accept payments via PayPal, and PayPal's Venmo mobile option. The new offering lets consumers scan a merchant QR code and then use the digital wallet apps to make in-person purchases and receive electronic receipts without having to touch any merchant equipment.
"By scaling PayPal and Venmo QR codes across an expansive physical footprint that includes the hundreds of thousands of small entrepreneurs running their business through the Clover platform, we are helping these businesses prepare for an unknown future by enabling touch-free payment technology that also drives customer loyalty, digital engagement and access to new customer segments," said Frank Keller, PayPal's senior vice president of commerce, said in the release.