Fiserv, a global leader in payments processing, is making a strategic move to better serve the gig economy, particularly gig workers who often face challenges accessing financial services during emergencies. The company has announced its acquisition of Payfare, a provider of instant payout and digital banking solutions tailored to the contractor workforce. This acquisition comes at a crucial time for Fiserv, as it aims to address the specific needs of gig workers in a rapidly evolving economy.
Payfare, known for its innovative workforce payment solutions for gig-economy companies, has recently faced challenges with the expiration of its largest contract with DoorDash. This development led to a significant drop in Payfare’s share price, making it an opportune time for Fiserv to acquire the company at a reduced share price. The acquisition is valued at just over $200 million, with Fiserv looking to leverage Payfare’s expertise to enhance its embedded finance capabilities and provide better services to its clients.
The gig economy has been growing rapidly in recent years, with more individuals turning to freelance and contract work for flexibility and independence. However, gig workers often face payment challenges, with delays in receiving their earnings being a common issue. A report by Payments Canada highlighted that one in five gig workers in Canada had to wait at least a couple of weeks to receive payment after completing their work, with many being paid in cash on the same day their contract ended.
In an effort to address these challenges, Payfare signed a contract with DoorDash in late 2020 to provide delivery drivers with a dedicated financial solution through the DasherDirect platform. This platform included a Business Prepaid Visa Card and a mobile banking app, aimed at streamlining payments and providing gig workers with easier access to their earnings. With the end of this contract, Payfare’s Lyft Direct Program may become its most significant asset, offering Lyft drivers a similar financial solution with additional features such as cash ATM deposit access and wellness perks.
The acquisition of Payfare by Fiserv represents a strategic move to better serve the needs of gig workers in the evolving economy. By combining Fiserv’s global reach and expertise in payments processing with Payfare’s innovative solutions tailored to the gig economy, the two companies aim to accelerate the delivery of embedded finance solutions for clients, empowering gig workers to navigate financial challenges more effectively. This acquisition marks a significant step forward in addressing the unique needs of gig workers and ensuring they have access to the financial services they require during emergencies and beyond.
