Dive Brief:

• In December, payments processor Fiserv purchased independent sales organization Miami Beach, Florida-based Merchant One, Inc., which markets to merchants in the restaurant, retail and e-commerce arenas, the company announced Tuesday. “Folding in this long-term Fiserv customer” should “enhance our direct merchant acquisition capabilities, extend the reach of our Clover product line and create cost synergies,” Fiserv CFO Bob Hau said during the company’s fourth quarter earnings call.
• The company also acquired Argentinian payment service provider Yacare in the fourth quarter, expanding Fiserv’s capabilities in Argentina “by enabling us to bring our QR code payment acceptance to our merchants there,” Hau said. Latin America is the fastest growing region for Brookfield, Wisconsin-based Fiserv, which is seeing notable growth in the merchant segment in Brazil and Argentina, Hau said. Overall, “our international business is growing almost double the rate of our domestic U.S. business,” Hau said.
• Fiserv, which also provides financial technlogy services, spent $1 billion on acquisitions in 2022, the company said Tuesday. A Fiserv spokesperson didn’t immediately respond to questions about how much Fiserv paid for Merchant One and Yacare, and other terms of the deals.

Dive Insight:

Tightened spending, business divestitures in the third and fourth quarters, and “resulting productivity benefits” from Fiserv’s merger with First Data resulted in improved profit margins for the year, Hau said Tuesday. Hau has served as Fiserv’s finance chief for seven years, according to his LinkedIn profile.

As it faced profit margin pressure last year, the company pared its global workforce. Fiserv CEO Frank Bisignano has maintained those cuts were part of the long-term strategy behind the Fiserv-First Data merger.

Fiserv’s fourth-quarter revenue rose about 9% over the year-earlier period to $4.6 billion, according to a Tuesday release. Net income more than doubled to $782 million as the company chopped expenses by about 7%.

Fiserv’s severance costs jumped nearly 75% in the quarter to $75 million and amounted to $209 million for 2022, according to a Tuesday filing with the Securities and Exchange Commission.

During the quarter, Fiserv signed new business agreements with mega-retailer Target, to process its credit cards, and with Canada’s Desjardins Group, also for processing services. Bisignano said Tuesday the company has begun working with both companies and anticipates revenue benefits from each starting next year.

Fiserv also netted more payments work for California’s state government, putting funds on debit cards that are issued to residents. “We were awarded another prepaid mandate supporting California’s unemployment and related insurance programs,” Bisignano said.

That, along with disbursement support for the comptroller’s office announced in October 2022, “represents longer term, recurring work for the state and marks our leadership in payments for the government vertical,” Bisignano said. 

A separate tax refund program that Fiserv worked on for that state contributed to revenue during the quarter, Hau noted. 

Additionally, Fiserv signed “a large, e-commerce payments company for debit network services” during the quarter, Bisignano said. “This client will enable our Star and Accel networks for its millions of merchants as an alternative to the larger debit networks.” A Fiserv spokesperson didn’t immediately respond to requests for more information on that customer.