First Data 2008 Annual Report Download - page 68

FIRST DATA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Debit processing revenue increased on a pro forma basis in 2007 compared to historical 2006 due to growth of existing clients and acquisitions noted
above which added approximately 5 and 4 percentage points, respectively, to the credit card, retail card and debit processing revenue growth rate. The
majority of domestic debit issuer transaction growth in 2007 compared to 2006 was driven by the shift to the use of debit cards from checks and cash. Pricing
and lost business negatively impacted the pro forma 2007 period by 3 and 3 percentage points, respectively.
As discussed in the "Economic Conditions" section above and as a result of a bank consolidation, JPMorgan Chase intends to terminate services under
certain Washington Mutual agreements. Washington Mutual is one of the Company's largest debit customers. This will negatively impact the overall growth
in "Transaction and processing service fees revenue" and "Reimbursable postage and other" line items within the Consolidated Statements of Operations
during 2009.
Check processing revenue
Check processing revenue for 2008 was negatively impacted by a decrease in revenue from existing clients due to declines in overall check volumes
from those seen in 2007 with the check verification volumes experiencing the most significant decrease. The decrease in revenue from existing clients
negatively impacted the 2008 check services revenue growth rate by 9 percentage points compared to pro forma 2007.
Check processing revenue was favorably impacted in the 2007 predecessor and successor periods by the expansion of its ECA processing into more
locations of large national retailers but negatively impacted by a decline in the use of paper checks.
Other revenue
Other revenue consists mostly of revenue from the Company's output services, government payments business and remittance processing. Other
revenue for 2008 was negatively impacted by net lost business. The lost business includes statement production, remittance processing and call volumes. Net
lost business negatively impacted the 2008 other revenue growth rate by 6 percentage points compared to pro forma 2007. Overall output services experienced
growth driven by growth of existing customers while remittance processing experienced a decline in revenue from existing customers.
Remittance processing services revenue for the 2007 predecessor and successor periods was negatively impacted due to the deconversion of a large
customer and consumer conversion from paper to electronic payment methods. Output services revenue for the 2007 predecessor and successor periods was
not significantly impacted by any unique events or trends. Output services remained relatively flat for the 2007 pro forma period compared to historical 2006.
Product sales and other revenue
Product sales and other revenue in 2008 was negatively impacted due most significantly to contract termination fees received in the 2007 predecessor
period as well as a decrease in professional service fees in 2008 in the credit card and retail card businesses.
Product sales and other revenue in the 2007 predecessor period was favorably impacted in comparison to 2006 by the receipt of contract termination
fees.
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