Payments processor Fiserv has six bank clients in the FedNow pilot program and another 20 committed to adopting that new instant payments system from the Federal Reserve when it goes live in July.

Fiserv CEO Frank Bisignano provided that update during the company’s first-quarter earnings conference call with analysts on Tuesday. Like other financial technology providers, Fiserv will enable customers to connect and use FedNow services when the central bank flips on the new payments system. 

“We are encouraged by the opportunity to add many more banks and credit unions,” Bisignano said.

Salem Five Cents Savings Bank, Peoples Bank and Mediapolis Savings Bank, are Fiserv financial institution clients that are participating in the FedNow pilot, a Fiserv spokesperson said.

For the first quarter, the Brookfield, Wisconsin-based company’s revenue jumped 9.9% to $4.55 billion, but its net income sank 19% to $563 million, according to the Tuesday press release. That’s partly because the company’s first-quarter net income last year benefited from a one-off sale of merchant contracts when it exited a joint venture.

Its overall business grew in the first quarter despite significant changes last year, including some employee cuts, the divestment of some business units and a plan to move its suburban headquarters to the city of Milwaukee.

Fiserv’s first-quarter revenue climbed across its operation, including the merchant acceptance, payments and fintech segments, with a lift from international demand. 

Still, the business of accepting payments from merchants slowed down as the first quarter progressed, with consumers shifting toward non-discretionary spending and reducing their basket sizes, Bisignano said on the call.

“It’s not yet clear whether broader macro headwinds are beginning to impact consumer spending, but we did see payment volume growth slow a bit late in the quarter,” Bisignano said.

Nonetheless, the company maintained its projection for annual revenue growth of as much as 9% this year, and moved the lower end of that percentage growth range up one percentage point.

“We are mindful that higher interest rates may weigh on consumers and thus we anticipate second-quarter revenue growth in this segment to ease from the very strong first-quarter levels,” he said. 

Analysts reacted positively to the results. “Acceptance accelerated nicely to +18% (growing well faster than global industry),” analysts at the financial firm Robert W. Baird said in a note to investors regarding the Fiserv results.

Fiserv hasn’t been negatively impacted by banking turmoil that followed the failure of Silicon Valley Bank last month. Bisignano maintained that Fiserv’s bank customers are in good shape and “demand is high,” he said.

“There was a little coastal problem, but I felt throughout the country, it’s been very very strong,” Bisignano said during the call. “Our banks leaned on us and we were all over how to help them through it and deliver what they needed during that turmoil.”

Fiserv will gain from its work with ride-share company Uber on debit routing ahead of a new federal regulation set to take effect July 1, and also in providing fintech services to Walmart’s evolving One financial services venture, the CEO said.

Bisignano noted that Fiserv retained a top market position last year with respect to merchant processing, among other categories. The company’s No. 1 non-bank merchant processing standing was confirmed by a league table published by industry research firm Nilson Report last month.

“We intend to maintain the privileged position we hold,” said Bisignano, referencing the company’s 41,000-employee workforce.

By Lynne Marek on April 26, 2023
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