Levi & Korsinsky, LLP: High-Risk Merchant Concentration Practices at Center of Paysafe Securities Litigation
Important Notice Regarding Alleged Merchant Risk Misrepresentations
NEW YORK, Feb. 23, 2026 (GLOBE NEWSWIRE) -- Levi & Korsinsky, LLP notifies investors in Paysafe Limited (NYSE: PSFE) that a class action lawsuit has been filed on behalf of shareholders who purchased securities between March 4, 2025 and November 12, 2025.
Click here to learn more about this case. You may also contact Joseph E. Levi, Esq. at jlevi@levikorsinsky.com or (212) 363-7500.
The global digital payments industry processes trillions of dollars annually, requiring careful risk segmentation by merchant category. Paysafe, which operates across nearly 100 commercial banks in 34 countries, saw its stock reach $17.93 before undisclosed merchant portfolio vulnerabilities allegedly surfaced.
The Alleged Merchant Portfolio Risk Methodology
According to the lawsuit, Paysafe maintained significant exposure to a single high-risk ecommerce client within its Merchant Solutions segment. The complaint alleges that the Company failed to adequately provision for credit losses tied to this concentrated risk, while simultaneously presenting its banking infrastructure as a competitive strength.
How Merchant Concentration Allegedly Affected Financial Reporting
The lawsuit contends that by understating credit loss reserves and write-offs related to problematic merchant accounts, Paysafe's reported financial results painted an overly optimistic picture. The Company repeatedly affirmed full-year 2025 guidance of $1,710 - $1,734 million in revenue, which the complaint alleges lacked a reasonable basis given known merchant quality issues.
Key Merchant Risk Allegations for Shareholders
The complaint raises several core allegations regarding merchant portfolio oversight:
- The Company had undisclosed exposure to a single high-risk ecommerce merchant whose sudden shutdown triggered multi-million-dollar write-downs
- Credit loss reserves were allegedly insufficient given the known risk profile of the Merchant Solutions segment
- Higher-risk Merchant Category Codes made certain client services difficult to bank, a fact not disclosed to investors
- Management repeatedly affirmed financial guidance while allegedly aware that merchant quality issues threatened those projections
- The Company's stated "strong global banking infrastructure" allegedly masked difficulties securing bank sponsorship for riskier merchant categories
The Digital Payments Risk Factor
Payment processors that service lower-tier merchant categories face inherent risks from chargebacks, bank sponsor reluctance, and regulatory scrutiny. The lawsuit alleges that Paysafe failed to disclose that these well-known industry risks were actively impacting its operations during the Class Period.
"This case presents important questions about merchant risk disclosure obligations in the digital payments sector. When a payment processor's revenue depends on its ability to bank high-risk merchants, investors deserve to know about challenges in that area," stated Joseph E. Levi, Esq.
Get more information or call (212) 363-7500.
ABOUT LEVI & KORSINSKY, LLP
Over the past 20 years, Levi & Korsinsky has secured hundreds of millions of dollars for aggrieved shareholders. The firm has extensive expertise in complex securities litigation and a team of over 70 employees. For seven consecutive years, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report. Applications to serve as lead plaintiff must be filed by April 07, 2026.
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
