First Data 2013 Annual Report Download - page 36

Revenue growth outpaced transaction growth in 2012 compared to 2011 driven most significantly by the impact of lower debit interchange rates
discussed above partially offset by merchant mix, pricing mix and price compression. Revenue per transaction increased by 4 percentage points for 2012
compared to 2011 driven by the items impacting acquiring revenue discussed above as well as the shift in processing described in the “Processing fees and
other revenue from alliance partners” section below.
Check processing revenue. Check processing revenue decreased in 2013 versus 2012 and in 2012 versus 2011 due most significantly to lower
overall check volumes from continued check writer and merchant attrition and the impact of merchant mix resulting from a shift in regional to national
merchants in 2012 versus 2011.
Prepaid revenue. Prepaid revenue increased in 2013 compared to 2012 due to higher transaction volumes within the open loop payroll
distribution program related to new and existing business, higher closed loop transaction volumes as well as higher card shipments. In addition, prepaid
revenue increased in 2013 versus 2012 by 4 percentage points due to growth in one of the Company’s alliances, accounted for under the equity method,
resulting from the acquisition of a payment solutions business that occurred in the fourth quarter of 2012.
Prepaid revenue increased in 2012 compared to 2011 due most significantly to higher transaction volumes within the open loop payroll distribution
program related to existing customers and new business.
Processing fees and other revenue from alliance partners. The increase in processing fees and other revenue from alliance partners in 2013
compared to 2012 resulted from increased volumes within the Company’s merchant alliances. The increase in processing fees and other revenue from alliance
partners in 2012 compared to 2011 resulted from increased fees from the BAMS alliance due to a shift of processing from the alliance partner to the Company
beginning in October 2011, as well as increased transaction and dollar volumes within the Company’s merchant alliances. The impact of the shift in
processing benefited the 2012 revenue and growth rate by approximately $55 million or 37 percentage points.
Product sales and other revenue. Product sales and other revenue decreased in 2013 compared to 2012 primarily due to a decline in terminal sales
including lower bulk sales. Product sales and other revenue decreased in 2012 compared to 2011 primarily due to a decline in equipment sales including lower
bulk sales and a gain on the sale of a portfolio in 2011, partially offset by growth in leasing revenue resulting from increased lease originations and lease
renewals.
Segment EBITDA. Retail and Alliance Services segment EBITDA increased in 2013 compared to the same period in 2012 as a result of overall
growth from the revenue items noted above, slightly offset by increased expenses primarily in provisions for uncollectible receivables recorded in the first and
third quarters of 2013 and increased technology and operations costs including product investments.
The impact of the revenue items noted above primarily contributed to the increase in Retail and Alliance Services segment EBITDA in 2012
compared to 2011. The Dodd-Frank Act benefited the segment EBITDA growth rate in 2012 compared to the prior year by an estimated $70 million or 5
percentage points. The impact from the shift in processing related to the BAMS alliance positively impacted the segment EBITDA growth rate for 2012
compared to 2011 by approximately $44 million or 3 percentage points.
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