American FinTech giant Fiserv is set to acquire Toronto-based Payfare for $201.5 million CAD ($140 million USD), capping off a turbulent year for the payments processor that included a share price plummet and a strategic review.
Fiserv may have prompted Payfare’s troubles when it won the business of its biggest client, DoorDash.
Payfare, an earned wage access (EWA) platform, offers digital banking services and payment solutions for contract and gig workers. Payments Dive reported that Fiserv may have prompted the Canadian company’s troubles when it won the business of its biggest client, DoorDash.
Payfare powered the food delivery app’s DasherDirect program, a prepaid debit and mobile banking app for delivery workers. The company initiated a strategic review in September after losing DoorDash and seeing its share price tumble to an all-time low.
The all-cash transaction is expected to close in the first half of 2025, pending shareholder and court approvals. Payfare was a publicly traded company on the Toronto Stock Exchange (TSX) and OTCQX but will be delisted once the deal closes.
“Joining Fiserv is a tremendous opportunity for Payfare,” Marco Margiotta, founder and CEO of Payfare, said in a statement. “We recognize that Fiserv gives us enhanced scale and technology, which better positions us to serve a growing number of large organizations and deliver a modern digital experience.”
Fiserv is a financial services provider with clients in over 100 countries and has acquired several FinTech companies in recent years. Fiserv is offering Payfare $4 per share, Reuters reported, a significant drop from the stock’s value before DoorDash departed.
Payfare’s EWA services aim to give gig workers speedier access to their earnings, as well as cashback rewards. Other than DoorDash, with whom Payfare’s partnership ends in early 2025, Payfare’s other clients include Lyft, Uber, and Uber Eats.
RELATED: Loss of DoorDash partnership prompts Payfare share price plummet and strategic review
After losing DoorDash, Payfare scrapped its 2024 financial outlook for revenue and earnings, leading to its share price on the TSX dropping more than 75 percent to about $2 in late September. This prompted Payfare’s board to initiate a strategic review, which assessed options such as “strategic partnerships, strategic investments, accretive acquisitions, a potential sale, merger or other business combination,” the company said in a statement.
The acquisition allows Fiserv to expand further into the gig economy as the share of contract workers grows in Canada and worldwide. Gig workers deal with more financial precarity: a 2021 federal report found that gig workers and freelancers are more vulnerable to unpredictable earnings and the risk of late payments or missed payments.
According to Fiserv, acquiring Payfare will allow the company to incorporate a slew of financial services focused on serving gig workers, such as card program management, integrations across microservices, and a white-label consumer app.
“Together, we can accelerate the delivery of embedded finance solutions for all of our clients, empowering their next chapter of success. We look forward to welcoming the talented Payfare team to Fiserv,” Frank Bisignano, president and CEO of Fiserv, said in a statement.
BetaKit has reached out to Fiserv for comment, including about whether Payfare employees will all be absorbed by Fiserv.
However, Bisignano may not be running Fiserv for long, as he has been tapped to lead the US Social Security Administration under the forthcoming Trump administration. Bisignano told Yahoo Finance that a succession plan would only be announced once he is confirmed by the Senate.
Feature image courtesy DoorDash.