Dive Brief:

• Payment processor Fiserv may look to make an acquisition that would bolster merchant unit Clover’s offerings in the retail and services verticals, akin to its purchase of BentoBox in the restaurant space, CEO Frank Bisignano suggested this week.
• “You should expect us to continue to invest in those” verticals, Bisignano said Tuesday during an investor conference appearance. The company is focused on merger and acquisition activity as well as organic investment in its merchant acceptance business, he added.
• Fiserv has been “super selective” in deploying capital to acquisitions, and carefully considers how to leverage a business it might purchase, Bisignano said. That includes how a company’s capabilities might fit into Clover and Fiserv’s distribution network, he said.

Dive Insight:

When Baird Equity Research Analyst David Koning pointed to BentoBox and asked if there are other verticals where Fiserv might consider making a similar acquisition, Bisignano said that’s “a really, really, big, long conversation” before identifying retail and services as verticals under its merchant acceptance segment that the company is “highly engaged in.”

Brookfield, Wisconsin-based Fiserv was an early investor in restaurant marketing and commerce company BentoBox and knew the company well before acquiring it in 2021, Bisignano said. BentoBox has since become a key part of Fiserv’s strategy to build out its offering in the restaurant vertical. “So you should expect us to do things like that,” Bisignano said of similar M&A moves.

Fiserv has made a slew of acquisitions in recent years. The company bought Finxact for $650 million in February 2022, along with independent sales organization The LR2 Group in June 2022, restaurant reservation management company Nextable last September, ISO Merchant One and Argentinian payment service provider Yacare late last year. In addition to BentoBox in 2021, Fiserv acquired NetPay, Integrity Payments, SpendLabs, Pineapple Payments, Radius8 and Ondot.

“Our formula is, if you look at all the acquisitions we do, how do we leverage the distribution of this franchise, how do we leverage the technical capability of this franchise and be able to take it to a place that the founder never thought they could?” Bisignano said.

Another purchase could be on the horizon: Fiserv issued €800 million in new debt on May 18, according to a filing with the Securities and Exchange Commission, and that could be used to fund M&A, Koning mentioned in a note to investor clients that day. 

“Valuations of potential M&A targets have come down, but expectations of those companies haven't aligned,” Koning wrote in a Tuesday note to investors based on his meeting with Bisignano. Fiserv “can be patient waiting for the right opportunity,” he said.

As it grappled with profit margin pressure last year, Fiserv also pursued divestitures, shedding an IT business unit along with operations in Costa Rica and Korea.