Dive Brief:
- Investors sued the payments processing giant Fiserv in federal court, alleging it forced merchants to migrate to Clover, its small business-focused point-of-sale service, and lied to investors about slowing growth of Clover sales as merchants rebelled against its cost.
- Moving businesses from an older system onto Clover concealed a slowdown in new merchant business for the point-of-sale system, according to the lawsuit filed Thursday by the City of Hollywood Police Officers’ Retirement System.
- The Milwaukee-based payment processor disputes the allegations, a spokesperson said in an emailed statement Monday. “Fiserv disagrees with the claims and will vigorously defend itself in the lawsuit,” the statement said.
Dive Insight:
“This case is about how Fiserv misled investors by artificially inflating its growth numbers through compelled migration of legacy customers using Payeezy, the company's older point of sale platform, to Clover, its expensive and feature-heavy POS platform,” said the complaint filed in the U.S. District Court for Southern New York.
The lawsuit seeks class action status, offering to represent anyone who bought or owned Fiserv stock between July 24, 2024 and July 22, 2025.
Fiserv in the past has identified the Clover unit as a key driver of future growth.
The company began phasing out Payeezy in 2023 and “forcibly migrated” as many as 200,000 merchants that had been using the older system to Clover beginning in late 2023 and continuing through the first half of 2024, the complaint says.
Fiserv executives then made misleading statements on the growth of Clover, the lawsuit alleges. For example, last summer then Fiserv CEO Frank Bisigiano told investors that Clover’s growth was fueled by new merchants signing up for the platform, according to the complaint.
Company executives also did not disclose that merchants were leaving Clover for POS competitors, such as Block’s Square and Toast, the complaint says.
Fiserv reported lower-than-expected earnings growth for the second quarter. Company executives, including CEO Mike Lyons, attributed the slowdown to delayed initiatives and economic uncertainty. The company's stock tumbled on the news that the processor fell short of analyst expectations.
Along with Fiserv, company officials Bisignano, Lyons, and Chief Financial Officer Bob Hau are named as defendants in the lawsuit.
“Plaintiff and Class members would not have purchased Fiserv stock at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by Defendants’ misleading statements,” the lawsuit says.
Lyons became CEO in May after Bisigiano left the company to lead the Social Security Administration.
