In This Article:
By Niket Nishant
(Reuters) -U.S. fintech firm Fiserv will buy Canada's Payfare in a C$201.5 million ($140 million) deal as it looks to expand payments offerings for gig-economy workers, the companies said on Monday.
The transaction follows Payfare's strategic review of its business, initiated shortly after it revealed that its agreement related to DoorDash's DasherDirect card program would not be renewed beyond early 2025. The disclosure had wiped off 75% of Payfare's value in a day.
Fiserv's offer values Payfare stock at C$4, a 90% premium to its last closing price, but is way below the stock price before the DoorDash announcement.
Acquiring Payfare will allow Fiserv to expand its footprint in a fast-growing market. Gig-economy workers often approach digital banking platforms for funds during unforeseen financial emergencies, especially if they lack enough savings.
The deal, expected to close in the first half of next year, could also mark one of the final undertakings by Fiserv CEO Frank Bisignano, who has been picked by President-elect Donald Trump to head the Social Security Administration.
Payfare's partners include some of the most recognizable gig-economy platforms such as ride-hailing firms Uber and Lyft.
"The deal is consistent with Fiserv's intent to lean into embedded finance," TD Cowen analysts said.
"Fiserv has announced key wins in recent months and this acquisition will further its technology offering."
The number of transactions processed by fintech providers, in partnership with employers, to allow employees early access to their wages grew more than 90% year-over-year in 2022, according to an estimate by the Consumer Financial Protection Bureau in July.
Payfare's shares climbed 78% on Monday. They have declined nearly 66% this year, while Fiserv has jumped 55%.
($1 = C$1.4403)
(Reporting by Niket Nishant in Bengaluru; Editing by Shilpi Majumdar and Shinjini Ganguli)