Clover Adoption Soars: Is FI Dominating the Small Business Market?

Fiserv, Inc.’s FI Clover platform is a vital component of its growth machinery, but recent performance presents mixed signals on FI’s market dominance. Despite impressive bottom-line growth during the second quarter of 2025, the underlying trends indicate a competitive landscape.

FI witnessed 30% year-over-year growth in Clover revenues during the June quarter, which is an impressive figure, suggesting the company’s successful strategy to sell high-margin and value-added services (VAS). VAS penetration was 24%, up from the year-ago quarter’s 20%, hinting at an increasing adoption of services beyond basic payment processing by merchants. This is the primary profitability strategy of the company.

Clover’s volume growth paints a different picture. During the second quarter of 2025, Clover’s volume increased 8%, which is significantly lower than the year-ago quarter’s 17% growth. This significant deceleration raises concerns about Fiserv’s ability to draw in new and organic business.

The disparity between revenues and volume growth implies a successful monetization strategy of its existing merchant base; however, its ability to acquire new merchants appears to be under pressure. A class action lawsuit has been filed against Fiserv, alleging artificial inflation of Clover’s revenues and volume by forced merchant migration. This led the merchants to leave Clover due to high costs and poor customer service. As a result, Clover volume decelerated, suggesting that positive statements about Clover’s growth and business outlook were misleading. This highlights the problem with relying on internal conversions rather than organic market leadership.

All in all, while Clover’s revenues and VAS adoption ramp up, the slowdown in volume growth indicates that Fiserv is not dominating the small business market yet. The company is facing challenges to win new clients, and the ability to boost organic volume growth will test its competitiveness.

FI’s Price Performance, Valuation & Estimates

The stock has plunged 31.9% in the year-to-date period against the industry’s 5.3% growth and the 8.8% rise of the Zacks S&P 500 Composite. FI’s industry peers, Western Union WU and Repay RPAY decreased 21.7% and 27.5%, respectively.

One-Year Price Performance

From a valuation perspective, Fiserv trades at a forward price-to-earnings ratio of 12.39X, lower than the industry’s 22.08X. Western Union and Repay appear more affordable, with forward price-to-earnings ratios of 4.74X and 6.14X, respectively.

P/E - F12M

Fiserv and Western Union each carry a Value Score of B, while Repay carries a Value Score of A.

The Zacks Consensus Estimate for Fiserv’s earnings for 2025 increased marginally, while for 2026 it dipped slightly, over the past 60 days.

FI currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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