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Fiserv Inc., one of the nation’s biggest processors, put up some notable growth numbers in the September quarter despite its size. How long it can maintain that momentum may depend on its ability to release new services and build on recent initiatives such as its SMB Bundle and Cashflow Central, services aimed at key client markets—merchants and financial institutions.
Cash Flow Central, which the Milwaukee-based processor announced in November, offers the company’s bank clients a package of digital-payments and merchant-acquiring capabilities. Now, after nearly a year in operation, the service has signed 10 clients, including three in the quarter, Fiserv’s top management said early Tuesday..
On the other side of the payments loop, the SMB Bundle, a payments-services offering the company says will be marketed to small businesses through its widely distributed channels for the Clover point-of-sale technology, is seen as ramping up fast. “We expect the Bundle to contribute to earnings next year,” Frank Bisignano, Fiserv’s chief executive, told equity analysts on a conference call early Tuesday to discuss the company’s quarterly results.
But, with respect to these and other new initiatives, Bisignano cautioned against too much optimism. “Of course, it’s early stages,” he noted. But the company also demonstrated its appeal to sizable retailers, with Costco signing on to develop a digital wallet, he added.
Now, Fiserv is showing signs of widening its reach in merchant services. The company’s application in Georgia for a merchant-acquiring charter was approved during the quarter, Bisignano told analysts on the call. The new financial-services entity is expected to go live next year, but, as Bisignano cautioned, “we are not becoming a bank.”
Overall, he told the analysts, the foundation has been laid for expansion into new services for new and existing clients. “We are moving to the next generation of solutions. This is not a vision. It is here today,” he noted, though, as he added, “of course it’s in the early stages.”
What’s not in the early stages is the company’s popular Clover point-of-sale technology, which processed transactions totaling $311 billion annualized in the quarter, up 15% year-over-year, Fiserv said. Clover revenue, meanwhile, grew 28%. Here, with a popular POS product, Fiserv isn’t standing still. The product set early this year added a kitchen-display unit for the red-hot restaurant sector, management said.
“We continue to see good revenue and volume growth out of Clover,” noted Bob Hau, Fiserv’s chief financial officer. Good enough, he added, for the company to set a goal of $4.5 billion in revenue for next year, though a slowdown in consumer spending has led management to ease up on expectations, he said.
Fiserv’s third quarter saw adjusted revenue grow 7% year-over-year to $4.9 billion, with organic growth—growth apart from acquisitions—registering at 15%. Revenue in the merchant solutions unit grew 9%, to $2.47 billion, with small businesses leading the way at $1.63 billion, up 9%.
The financial-solutions segment, which includes products such as banking, card-issuing, ATM services, and support for the Zelle peer-to-peer payments network, posted $2.41 in revenue, up 4.3%. Here, digital payments led the way with revenue of $987 million, a 5% growth rate.
