In a significant shift within the payments industry, Fiserv and Wells Fargo are preparing to conclude their long-standing acquiring joint venture, Wells Fargo Merchant Services (WFMS).

Initiated in 2019 following Fiserv’s acquisition of First Data, this partnership was designed to harness Wells Fargo’s vast customer base and sales expertise alongside Fiserv’s technology.

The joint venture was a strategic collaboration, with Wells Fargo owning a 60% stake and Fiserv holding 40%.

Fiserv’s recent regulatory filings revealed that the WFMS agreement will officially expire on April 1, 2025.

As a result, Fiserv expects to record a non-cash impairment charge between $400 million and $600 million in Q3 2024.

While the termination of this venture marks a significant change, Fiserv is poised to receive a cash payout or equivalent assets reflecting the value of its share.

This one-time impairment charge, however, will not affect Fiserv’s overall cash flow or its projected revenue growth for the next two years, which remains at a healthy 9-12% annually.

End of an acquiring era?

The end of WFMS doesn’t signal the end of the Fiserv-Wells Fargo relationship.

Both companies have agreed to transition to a new arrangement, with Fiserv continuing to provide processing services to Wells Fargo’s merchant clients under a fresh multi-year contract.

This evolution highlights a broader trend in the financial services space, where partnerships and strategic realignments are key to sustaining growth and innovation.

For existing customers of Wells Fargo Merchant Services, this transition is unlikely to cause disruption.

The new agreement ensures continuity in payment processing services. However, the upcoming changes provide an opportune moment for businesses to reassess their payment processing needs.

Consulting with payment processing experts, such as Swipesum, could help companies explore opportunities for cost efficiencies and service improvements.

The market is watching closely as Fiserv moves forward with this strategic shift.

Analysts have noted that Fiserv’s partnerships with industry giants like Walmart and PayPal signal a robust growth strategy.

These moves, coupled with Fiserv’s technological innovation, will likely set the pace for competitive dynamics in the payments space.

As the WFMS era draws to a close, Fiserv and Wells Fargo say they are opening a new chapter in their partnership, with the potential to reshape the industry landscape in the coming years.

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