Fiserv in the hot seat

A group of investors is suing the payment processing giant Fiserv and key executives over what they allege was a sleight of hand to pump up revenues from its Clover POS system in violation of the Securities and Exchange Act.

A class action lawsuit, filed in U.S. District Court for the Southern District of New York by the City of Hollywood Police Officers' Retirement System (located in Florida) and others alleges Fiserv hyped up growth of its Clover POS platform by migrating merchants to the platform from its older Payeezy platform, thereby artificially inflating gross payment growth.

In addition to Fiserv, the class action complaint names Frank Bisignano, who at the time was president and CEO of Fiserv. Bisignano currently serves as commissioner of the Social Security Administration. Additionally, Robert Hau, chief financial officer, and Kenneth Best, senior vice president and chief accounting officer at Fiserv, are named in the lawsuit.

The lawsuit alleges that Fiserv and the three executives "misled investors by artificially inflating its growth numbers" by compelling merchants using the company's older Payeezy platform to switch over to Clover, "it's expensive and feature-heavy POS platform."

As many as 200,000 locations 'forcibly migrated'

The lawsuit alleges that Fiserv "forcibly migrated as many as 200,000 merchant locations" that had been using Payeezy to Clover from late 2023 through the first half of 2024. It was also during this period that Fiserv began to phase out Payeezy sales and support.

The company reported Clover revenue of $2.7 billion on gross payment volume of $310 billion for 2024, which accounted for half of Fiserv's year-over-year revenue growth.

"As this forced migration increased Fiserv's headline growth numbers," the company falsely claimed that this growth was being driven by new customers organically signing up for Clover, according to the complaint. "This back book conversion provided a rapid boost to Clover revenue" and gross payment volume, the complaint further alleges.

Specifically, the complaint states, the company reported $2.7 billion revenue from Clover on gross payment volume of $310 billion for 2024, "accounting for half of Fiserv's year-over-year revenue growth." Little did investors know that the numbers were being boosted by forced migrations, the lawsuit alleges.

Missed revenue projections

At a November 2023 investor conference Bisignano described strategies to accelerate Clover's revenue growth, including expanding its direct sales force and adding new value-added services. At that same event, the company projected Clover revenues of $3.5 billion in 2025 and $4.5 billion in 2026, earned largely by signing up new merchants for Clover.

Specifically, the company claimed 90 percent of Cover revenue growth would continue to be generated by new merchant accounts, while only 10 percent would come from Payeezy customers who "proactively switched to Clover."

Fiserv even acknowledged that the higher-priced Clover platform was "impractical" for its small merchants who didn't require Clover's value added services functions.

"These representations were important to investors because Fiserv's ability to effectively sign-up new merchants to the Clover platform was indicative of the sustainability of Clover's revenue growth," the complaint states.

Things began to unravel on April 24, 2025, when Fiserv "shocked investors" by reporting gross payment volume growth of just 8 percent for the first quarter, "a material stepdown from 2024 GPV rates of between 14 percent and 17 percent," the complaint alleges.

The company said the lower growth in payment volume was due to slower growth in payments processed for Payeezy merchants who had migrated to Clover,

Fiserv disputes the claims

Despite the drop in transaction volume, revenue growth for the first quarter of 2025 remained relatively steady at 27 percent, the company said at the time. The explanation given: strong Clover hardware sales and value-added penetration from existing merchants. But the reality was that the spread was largely due to the loss of transaction volumes from former Payeezy merchants who jumped ship for cheaper, competing solutions, the complaint asserts.

On May 15 Fiserv disclosed that gross payment volume growth deceleration would continue throughout 2025.

Additionally, on July 23, 2025, Fiserv lowed the "top end" of its projected organic growth and confirmed that quarterly organic revenue had fallen to 9 percent year-over-year from 11 percent in 2024.

The "wrongful acts and omissions, and the significant declines in the market value of the Company's common stock pursuant to the revelations of fraud" have resulted in "significant damages," to the policeman's union retirement fund and other as yet to be added members of the lawsuit class, plaintiffs allege.

Green Sheet reached out to Fiserv for comment. The Milwaukee-based company responded that it "disagrees with the claims and will vigorously defend itself in the lawsuit."

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