What’s Next for Fiserv, FIS and Global Payments?

What’s Next for Fiserv, FIS and Global Payments?

Fiserv (tkr: FISV), FIS (tkr: FIS) and Global Payments (tkr: GPN) need to re-tool their product and service portfolios to better compete with modern Fintech platforms such as Square (tkr: SQ), PayPal/Venmo (tkr: PYPL), Stripe (private) and others. Tech giants Alphabet (tkr: GOOGL), Amazon (tkr: AMZN) and Apple (tkr: AAPL) also loom large in the Payments space.
  • Pursue acquisitions of modern fintech firms. Such deals could be for 100% of the outstanding equity or partial equity stakes (Visa, tkr: V executed partial equity stake deals with both Plaid and Stripe). Prospective deals would be richly-valued and would carry significant cultural risk. Cultural risk can be mitigated with partial equity stakes, particularly if deals are constructed with a put option.
  • Further consolidation among the legacy players. This is the obvious option and would be easiest to pursue from a Board approval standpoint. These companies know each other and share similar cultures. Would more of the same improve growth prospects / drive the innovation engine? Probably not. Such deals are more likely to delay the inevitable. Would the Biden Administration accept further consolidation among the group? Unknown.
  • FISV, FIS and GPN could pursue acquisitions of smaller fintech firms. Below are a handful of examples of payments-centric fintech firms. The full landscape of public and private payments-related firms includes approximately 100-200 companies globally.