Fiserv Acquires Payfare to Enhance Gig Economy Solutions

Fintech M&A | Jan 2, 2024

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Fiserv Acquires Payfare for CA$201.5M to Scale Gig Economy and Embedded Finance Capabilities Globally

Toronto-based financial tech company specializing in earned income access (EWA) and digital solutions for gig economy workers, Payfare Inc., announced that it has entered into a definitive agreement to acquire global fintech giant, Fiservfor a total purchase price of CA$201.5 million in an all cash deal. The transaction is structured as a court-approved plan of arrangement pursuant to the Business Corporations Act of British Columbia and expected to close in H1 2025 subject to shareholder and court approval.

Payfare’s Focus and Value in the Gig Economy

fee is a recognized leader in workers compensation and digital banking tools for gig workers and partners with major gig economy platforms such as Uber and Lyft, processing millions of transactions annually that pay wages which is faster and more efficient than traditional payment structures, such as bi-weekly or monthly.

See: How Fintechs Are Addressing Financial Inclusion in Canada

In the US only, the The gig economy employs 36% of the entire US workforce or 59 million workers in 2021 and so expected to reach $455 billion worldwide by 2025. Payfare’s tools address the critical needs of this fast-growing sector, making it a valuable asset for Fiserv.

TRANSACTION

Fiserv acquire all issued and outstanding Payfare shares at CA$4.00 per share in an all cash dealwhich represents a significant 90% premium to Payfare’s closing price on Dec 20, 2024 ($2.11), and a 92% premium to its 60-day volume weighted average trading price .

By taking Payfare, Fiserv is expanding the gig economyone of the fastest growing sectors worldwide. Embedded finance add offerings that cater to gig-focused workers and businesses new revenue streams and strengthening Fiserv’s position in the digital payments space with customized tools for the modern workforce.

Frank BisignanoChairman and CEO of Fiserv:

“Payfare has built a reputation as an innovator in workforce payments for companies in the gig-economy. Together, we can accelerate the delivery of embedded financial solutions for all of our client, empowering their next chapter of success.

Why Sell Payfare?

Payfare has experienced scaling challenges and with The loss of its major client, DoorDash, significantly reduced revenue with the stock price falling 50% in Q4, 2024. Before the acquisition was announced, Payfare stock experienced a lot of volatility, decreased from CA$8.43 to CA$2.05 in October 2024.

See: How This Fintech Has Helped Low to Moderate Incomes

While the acquisition will give Payfare the resources and infrastructure to strengthen and expand, the deal underscores a troubling trend in Canada’s fintech sector where Companies exit early because of scaling challenges.

Marco MargiottaCEO and Founding Partner of Payfare:

“This transaction represents tangible recognition of the value and strength that Payfare has built.”

Looking ahead

Following the closing, Payfare will no longer be a publicly traded company and it the shares will be delisted from the TSX and OTCQX markets. For Payfare, joining Fiserv is an opportunity to scale its gig economy and financial solutions globally.

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