With Fiserv Inc. announcing last week that it has inked a definitive agreement to acquire CashEdge Inc. for $465 million, Bank Innovation sought out one of its execs to find out what the purchase will mean. Though many of the deal’s details are still getting hammered out, Fiserv tells us the buy will help strengthen its digital payments offerings, especially relating to small businesses.
“We’re very excited about this,” Steve Shaw, vice president of strategic marketing, tells Bank Innovation. “It really helps take our kind of payments and universal money movement to the market more fully.”
The vendors are both leaders in the P2P payment space for banks. Fiserv offers FIs P2P services through ZashPay, while CashEdge offers FIs a P2P service through Popmoney. Zashpay has a little more than 800 agreements with financial institutions, while the Popmoney count is hovering around 200, estimates Shaw.
By acquiring CashEdge, Fiserv will gain more than just eliminating a P2P payment competitor, however. The acquisition will infuse a number of new capabilities into Fiserv’s offerings, especially as they relate to small businesses. Shaw tells Bank Innovation that CashEdge has the small business services’ bases covered, which Fiserv will be able to complement. Shaw highlights account aggregation as one such added function Fiserv will gain from the budding CashEdge acquisition.
“They have a lot of experience working with wealth strategists that enables [them] to consolidate a lot of information and bring it into one spot,” says Shaw, adding that porting that data over into Fiserv’s online PFM tool, for example, would be a complementary endeavor.
Boasting better tools for businesses is key for Fiserv’s P2P plans because the technology provider has learned that users don’t want to use the service just to pay peers. They want to pay businesses, like the lawn service provider, too.
“ZashPay goes against the initial business case for it,” says Shaw. “What we have seen [with ZashPay] is higher monetary payments as well as consumers sending money to small businesses.”
That’s why person-to-business payments are a large part of Fiserv’s current vision of P2P payments. At a recent tradeshow, a CashEdge exec made a similar claim.
When Bank Innovation asked Fiserv whether the latest acquisition aims to take on clearXchange, Shaw explained that the newer P2P payment offering is a good thing for Fiserv because clearXchange sheds light on the nature of the P2P market. In short, the P2P endeavor by Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. “validates” the fact consumers want to use their banks for P2P payments, says Shaw. Plus, he says Fiserv hopes to find ways to work with clearXchange.
With the CashEdge acquisition expected to be completed this September — subject to regulatory approval — the full operational details are not yet known.
“We are working on [the logistics] right now,” says Shaw. “We have to be careful to still function as two separate companies until [the deal] closes.”