First Data 2013 Annual Report Download - page 38

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Debit issuer transactions decreased for 2013 compared to 2012 due to net lost business, including the loss of the large financial institution mentioned
above, and a decline in gateway transactions, partially offset by growth from existing customers.
Debit issuer transactions in 2012 decreased compared to 2011 due to lost business, including the loss of a large financial institution mentioned above
that completed its deconversion during 2012. This decrease was partially offset by net impacts from the implementation of the Dodd-Frank Act discussed
below and growth of existing clients due in part to the shift to debit cards from cash and checks. The deconversion noted above also impacted domestic card
accounts on file in 2012 versus 2011.
The implementation of the Dodd-Frank Act described in the “Regulatory Reform” section above resulted in a net increase in debit issuer transactions
in 2012 compared to 2011. Growth benefited from new contracts with financial institutions and transactions routed on behalf of other networks through the
Company’s gateway. This growth was partially offset by losses in the existing customer base from merchant routing decisions. The net revenue impact in
2012 from the implementation of the Dodd-Frank Act was minimal because of lower rates on new transactions from regulated financial institutions and
gateway transactions compared to rates on transactions lost due to routing decisions.
Output services revenue. Output services revenue increased in 2013 compared to 2012 due to net new print and plastics business and growth from
existing customers. Output services revenue increased in 2012 compared to 2011 due to growth from existing customers and net new business which was
partially offset by price compression on contract renewals as well as volume based pricing incentives .
Other revenue. Other revenue consists mostly of revenue from remittance processing, information services, online banking and bill payment services
as well as voice services. Other revenue decreased in 2013 compared to 2012 due to decreases in information services, check clearing and voice services
driven by lost or disposed business partially offset by increases in remittance processing resulting from net new business. The disposed businesses impacted
the other transaction and processing service fee revenue growth rate for 2013 compared to 2012 by approximately 12 percentage points.
Other revenue for 2012 decreased compared to 2011 due to decreases in information services, voice services and check clearing driven by lost or
disposed business and decreases in volumes from existing customers partially offset by increases in online banking and bill payment services driven by new
business and growth from existing customers. A substantial portion of the information services as well as the check clearing services businesses had been
divested as of December 31, 2012.
Product sales and other revenue. Product sales and other revenue increased in 2013 compared to 2012 primarily due to deferred software license and
maintenance fee revenue from 2012 as well as increased programming revenue for several financial institutions.
Product sales and other revenue increased in 2012 compared to 2011 primarily due to new software license sales and professional services for
programming.
Segment EBITDA. Financial Services segment EBITDA increased in 2013 compared to 2012 due mostly to decreased operating expenses resulting from
the Company’s cost reduction initiatives partially offset by declines in revenue noted above. The decrease in operating expenses positively impacted the
segment EBITDA growth rate by 6 percentage points in 2013 when compared to 2012.
Financial Services segment EBITDA increased in 2012 compared to 2011 due most significantly to the revenue items noted above in the 2012
discussion, partially offset by a sales tax recovery recorded in 2011.
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