A fintech and payments company in the US, Fiserv acquires Payfare in a $140 million deal, strengthening its position more as a finance company. Payfare is a Canada-based fintech firm offering instant payments and digital banking services tailored for gig economy workers. With this deal, Fiserv aims to expand its current payment capabilities and capture the core audience of Payfare, which are gig economy clients with users hailing from popular platforms like Lyft and Uber Technologies.

This all-cash deal values Payfare at a 90% premium to its closing price ($2.8 per share) as of December 20th. It is expected to close by the first half of 2025.

Key Takeaways

• Strategic Acquisition to Strengthen Gig Economy Services: As announced on Monday, Fiserv acquired Payfare for approximately C$201.5 million ($140 million). Fiserv aims to expand its embedded finance capabilities through this deal and provide instant wage access solutions for gig economy workers.
• Impact on Payfare Following DoorDash Contract Loss: This deal resulted from a strategic evaluation by the Payfare board after they lost their largest client, Doordash. The market worsened after almost 75% of the share value dropped in a single day.
• Significant Premium for Payfare’s Shares: Fiserv offered a nearly 90% premium over Payfare’s closing stock price. Fiserv has confidence in Payfare’s technology and potential for growth in the gig economy sector.
• Regulatory Steps and Future Prospects: Subject to approvals, the transaction is expected to be finalized by mid-2025 and will delist Payfare from stock exchanges. Integration with Fiserv is anticipated to boost innovation and market competitiveness for both companies.

Fiserv Acquires Payfare for $140 Million to Strengthen Its Position in the Gig Economy

Fiserv Inc. announced this week that they have finalized the acquisition of Payfare Inc., a Canada-based company known for its innovative payment solutions targeted at gig economy workers. Fiserv, a leader in financial services technology for four decades, has acquired Payfare at approximately C$201.5 million (or $140 million). As mentioned, this is a strategic acquisition for Fiserv as it aims to enhance its footprint in the gig economy sector. Payfare has well-known gig economy platforms as clients, including ride-hailing companies Lyft and Uber.

In recent years, the gig economy has grown fast as more and more workers rely on flexible and on-demand jobs to earn their livelihood. This has created a need for an efficient and reliable payment system so workers can access their wages immediately. Payfare addressed this need by offering tailored solutions that allow gig workers to access their earnings instantly, an invaluable service for managing cash flow and financial emergencies.

Fiserv‘s decision to acquire Payfare is driven by a desire to enhance its embedded finance capabilities and expand its service offerings to include instant wage access and other specialized financial services for gig workers. This move is aligned with Fiserv’s ongoing efforts to integrate more comprehensive and flexible financial services into its portfolio, which will now include Payfare’s white-label consumer apps, card program management, and advanced microservices. This enhances Fiserv’s current strengths in bank ledgers, processing, and integrated additional services.

The Payfare board has approved the deal, which is expected to be finalized in the first half of 2025, subject to shareholder and court approvals.

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The transaction results from Payfare’s strategic evaluation of its operations began soon after the company announced that its contract with DoorDash for the DasherDirect card program would not be extended past early 2025. After losing DoorDash, its largest client, Payfare found itself in a difficult position, leading to the withdrawal of its previously issued earnings forecast for 2024. The announcement led to a 75% decrease in Payfare’s value within a day.

With this transaction, Payfare will be the tenth among 20 Canadian technology firms that went public between mid-2020 and late 2021 to revert to private ownership following a sector-wide price drop three years ago. Many smaller tech company shares have yet to recover. Several other larger tech companies listed on the TSX have been acquired in the last few years. Meanwhile, Montreal-based Lightspeed Commerce Inc., which went public in 2019, is considering potential takeover offers as part of a strategic review initiated earlier this year.

The deal, which translates to a significant premium over Payfare’s recent stock prices, reflects Fiserv’s strong belief in the potential of Payfare’s technology and market position. This acquisition price, set at C$4.00 ($2.8 per share) per share in cash, represents a nearly 90% premium over Payfare’s closing price before the announcement, underlining the strategic importance of this acquisition for Fiserv.

For Fiserv, the acquisition of Payfare is not just about expanding its product offerings—it’s also a strategic move to position itself strongly within the burgeoning gig economy. By integrating Payfare’s capabilities, Fiserv aims to offer more robust and flexible financial services, enhancing its overall market competitiveness and appealing to gig economy platforms and their workforce.

Joining forces with Fiserv provides Payfare with the resources and global reach necessary to scale its operations and enhance its technological offerings. This is expected to bring about significant growth opportunities for Payfare, allowing it to serve a broader client base and innovate faster.

Fiserv’s CEO, President, and Chairman, Frank Bisignano, remarked that by working together, they can hasten the provision of embedded finance solutions for all their clients, supporting their upcoming phase of success. He expressed enthusiasm about integrating Payfare’s skilled team into Fiserv.

Payfare’s CEO and founding partner, Marco Margiotta, noted that their board, alongside financial advisors, undertook an extensive strategic review, assessing a variety of acquisitions, commercial partnerships, and other opportunities. They determined that the transaction was in the best interests of the company, its stakeholders, and shareholders, offering a dependable value through an all-cash proposal.

After completing the transaction, Fiserv intends to remove Payfare’s shares from the OTCQX and the Toronto Stock Exchange (TSX). It will also seek to end Payfare’s status as a reporting issuer under Canadian securities laws.

The transaction will be carried out through a court-sanctioned plan of arrangement under the Business Corporations Act of British Columbia.

Keefe, Bruyette, & Woods (KBW) served as Payfare’s financial advisor, and Blair Franklin Capital Partners guided the Special Committee. Payfare engaged Dentons and Borden Ladner Gervais (BLG) for legal counsel, while Foley & Lardner LLP and Blake, Cassels & Graydon LLP acted as external legal advisors for Fiserv.

The focus will be on how effectively Fiserv integrates Payfare’s technologies and whether this acquisition will lead to the anticipated growth and innovation in services for gig economy workers. Additionally, with Fiserv’s CEO soon taking a new role with the Social Security Administration, it remains to be seen how the company will continue its strategic expansions under new leadership.

About Fiserv

Fiserv, Inc., a prominent provider of payments and financial services technology, operates globally across various regions, including the United States, the Middle East, Europe, Latin America, Africa, and the Asia-Pacific. The company is organized into three main segments: Financial Technology, Payments and Networks, and Merchant Acceptance. The Financial Technology segment delivers banking solutions, including digital banking, account management, consulting, risk management, check processing, and additional support services.

The Payments and Network segment handles card and non-card transactions, encompassing credit, debit, prepaid processing, fraud protection, and ATM services. Fiserv caters to a diverse clientele, including banks, merchants, credit unions, and other financial entities. Established in 1984, the company is headquartered in Milwaukee, Wisconsin, underscoring its longstanding presence and expertise in the financial technology industry.

Meanwhile, the Merchant Acceptance segment offers mobile payments, merchant acquiring, security solutions, and the Clover and Carat systems, tailored for small to mid-sized businesses and large enterprises. These services are marketed through direct sales, partnerships, and joint ventures.

About Payfare

Payfare Inc., a financial technology firm, delivers immediate payment and digital banking services tailored for gig economy workers across the United States, Canada, and Mexico. The company’s main product, the PayFare platform, enables workers to access their earnings promptly. It offers banking services, including money transfers, ATM access, mobile wallets, and payment cards. Additionally, Payfare provides specialized solutions like the Paid App and the Paid Portal, facilitating seamless financial transactions for gig economy professionals.

Established in 2012, Payfare is headquartered in Vancouver, Canada, positioning itself as a key player in financial solutions for the gig economy sector.

Conclusion

The acquisition of Payfare by Fiserv represents a pivotal move in the evolving financial services landscape, particularly within the rapidly growing gig economy. By integrating Payfare’s instant payment solutions and digital banking capabilities, Fiserv strengthens its ability to address the unique financial needs of gig workers while enhancing its embedded finance offerings.

For Payfare, the deal provides access to Fiserv’s global resources and expertise, enabling broader market reach and faster innovation. This strategic partnership is expected to drive significant growth and position Fiserv as a leader in financial technology solutions tailored to diverse economic sectors.