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Fiserv Acquires Payfare to Boost Gig Economy Solutions
Fintech M&A | Jan 2, 2025
Image: Freepik/rawpixel.com
Fiserv Acquires Payfare for CA$201.5M to Scale Gig Economy and Embedded Finance Capabilities Globally
Toronto-based financial tech firm specializing in earned wage access (EWA) and digital solutions for gig economy workers, Payfare Inc., announced that it has entered into a definitive agreement to be acquired by global fintech giant, Fiserv, for a total purchase price of CA$201.5 million in an all cash deal. The transaction is being structured as a court-approved plan of arrangement as per British Columbia’s Business Corporations Act and is expected to close in H1 2025 subject to shareholder and court approvals.
Payfare’s Focus and Value of the Gig Economy
Payfare is a recognized leader in workforce payments and digital banking tools for gig workers and partnerships with major gig economy platforms such as Uber and Lyft, processing millions of transactions annually that paid out wages faster and more efficiently than traditional payment structures, such as bi-weekly or monthly.
See: How Fintechs Are Tackling Financial Inclusion in Canada
In the U.S. alone, the gig economy employed 36% of the entire U.S. workforce or 59 million workers in 2021 and is projected to reach $455 billion globally by 2025. Payfare’s tools address critical needs in this rapidly growing sector, making it a valuable asset for Fiserv.
Transaction
Fiserv will acquire all issued and outstanding shares of Payfare for CA$4.00 per share in an all cash deal, representing a significant 90% premium over Payfare's closing price on Dec 20, 2024 ($2.11), and a 92% premium over its 60 day volume weighted average trading price.
By acquiring Payfare, Fiserv expands into the gig economy, one of the fastest growing sectors globally. Embedded finance offerings that cater to gig-focused workers and businesses will add new revenue streams and strengthen Fiserv's position in the digital payments space with customized tools for the modern workforce.
Frank Bisignano, Chairman and CEO of Fiserv:
“Payfare has built a reputation as an innovator in workforce payments for gig-economy companies. Together, we can accelerate the delivery of embedded finance solutions for all of our clients, empowering their next chapter of success.”
Why Did Payfare Sell?
Payfare experienced scaling challenges and with the loss of its major client, DoorDash, revenue's sharply declined along with its stock price plummeting over 50% in Q4, 2024. Before the acquisition was announced, Payfare's stock was experiencing significant volatility, declining from CA$8.43 to CA$2.05 in October 2024.
See: How This Fintech Is Helping Low-to-Moderate Income Earners
While the acquisition will provide Payfare with the resources and infrastructure to stablize and expand, the deal highlights a troubling trend in Canada's fintech sector where companies exit early due to scaling challenges.
Marco Margiotta, CEO and Founding Partner of Payfare:
“This transaction represents tangible recognition of the value and strength of what Payfare has built.”
Looking Ahead
Post closing, Payfare will no longer be a publicly traded company and its shares will be delisted from the TSX and OTCQX markets. For Payfare, joining Fiserv is a chance to scale its gig economy and embedded finance solutions globally.
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