Magazine article American Banker

Fiserv Sees Potential in P-to-P Payments

Magazine article American Banker

Fiserv Sees Potential in P-to-P Payments

Article excerpt

Byline: Jeremy Quittner

Bank technology provider Fiserv Inc. has positioned itself for a wave of growth in electronic payments.

Though its recent purchase of rival CashEdge Inc. is contributing just a small portion of Fiserv's of revenue today, it expects CashEdge and related business lines to balloon in the coming years as more consumers and small businesses initiate payments through mobile devices and the Web.

"The energy around this is great," Jeffery Yabuki, president and chief executive of Fiserv, said during a conference call to discuss its third-quarter earnings.

CashEdge's Popmoney is a person-to-person payment product that many large banks offer consumers. It competed with Fiserv's ZashPay, which has been more business-focused. Both allow bank customers to make payments to one another using just a recipient's name and email address or mobile phone number.

Fiserv will likely combine the products to better serve the consumer and small business markets, experts say. The Brookfield, Wis., company currently has 1,000 customers for its ZashPay product, Yabuki said.

Fiserv's net income declined 5%, to $127 million, from $134 million in the third quarter a year earlier. Its revenue rose 3.7%, to $1.06 billion, from $1.02 billion a year earlier.

Though Fiserv talks up the payments aspect of its CashEdge acquisition, its immediate revenue from P-to-P is likely to be quite modest, says Peter Heckmann, senior research analyst for Avondale Partners LLC, of Nashville.

Fiserv will get about $60 million in revenue a year from its September purchase of the New York company, although P-to-P will be less than 5% of that, or less than $3 million, Heckmann says. By contrast, ZashPay will add less than $5 million in annual revenue.

A greater percentage of revenue will come from other products that CashEdge offers, such as its account-opening and funding services and account aggregation, Heckmann says. …

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