Fiserv is taking a strong step forward to better serve the gig economy—particularly gig workers, who often face challenges accessing services during financial emergencies—with its acquisition of Payfare.
A global leader in payments processing serving businesses across more than 100 countries, Fiserv aims to address these needs with the help of Payfare, a provider of instant payout and digital banking solutions, tailored to the contractor workforce.
The timing is opportune for Fiserv, which is purchasing Payfare at a reduced share price. In September, Payfare largest contract with DoorDash was not renewed, ending its involvement with the DasherDirect platform. Following the announcement, Payfare’s share price dropped from $8.43 to $2.05, according to The Deep Dive.
Shortly after, Payfare announced it was embarking on a strategic review to explore new opportunities, including a potential sale. Reports indicate that Fiserv is acquiring Payfare for $4 per share, valuing the transaction at just over $200 million.
“Payfare has built a reputation as an innovator in workforce payments for gig-economy companies,” Frank Bisignano, Chairman, President and Chief Executive Officer of Fiserv, said in a statement. “Together, we can accelerate the delivery of embedded finance solutions for all of our clients, empowering their next chapter of success.”
A Workers’ Struggle
Payments to gig workers have long been fraught with challenges on both ends. A 2021 report by Payments Canada on the gig economy in the region found that one in five gig workers waited at least a couple of weeks to receive payment after completing their work. Among those on the same day their contract ended, most were paid in cash.
In late 2020, Payfare signed a contract with DoorDash in hopes of alleviating some of these issues. The agreement centered on DasherDirect, a platform that provided DoorDash delivery drivers with a dedicated financial solution, including a Business Prepaid Visa Card and a mobile banking app.
Once that contract comes to an end, Payfare’s most significant asset may be the Lyft Direct Program. This offering includes a Lyft Direct debit card and banking app, as well as additional features such as cash ATM deposit access and wellness perks.
