First Data 2011 Annual Report Download - page 36

Retail and Alliance Services segment results.
Year ended December 31, Percent Change
(in millions) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Revenues:
Transaction and processing service fees $ 2,974.5 $ 2,923.9 $ 2,720.1 2% 7%
Product sales and other 407.5 390.9 342.7 4% 14%
Segment revenue $ 3,382.0 $ 3,314.8 $ 3,062.8 2% 8%
Segment EBITDA $ 1,407.5 $ 1,322.3 $ 1,193.5 6% 11%
Segment margin 42% 40% 39% 2pts 1pt
Key indicators:
Domestic merchant transactions (a) 35,619.8 33,543.8 27,388.3 6% 22%
(a) Domestic merchant transactions include acquired VISA and MasterCard credit and signature debit PIN-debit, electronic benefits
transactions, and processed-only or gateway customer transactions at the POS. Domestic merchant transactions reflect 100% of
alliance transactions and include all of the transactions related to merchants contributed by BofA to the BAMS alliance since the
formation of the alliance on June 26, 2009. Domestic merchant transactions include activity for JPMorgan Chase merchants that
continue to process on the Company's platforms. Transactions in prior years have been adjusted to conform to current year
presentation.
Transaction and processing service fees revenue.
Year ended December 31, Percent Change
(in millions) 2011 2010 2009 2011 vs. 2010 2010 vs. 2009
Acquiring revenue $ 2,204.4 $ 2,169.7 $ 2,075.2 2% 5%
Check processing revenue 330.1 370.7 358.3 (11)% 3%
Prepaid revenue 291.1 263.2 214.4 11% 23%
Processing fees and other revenue from alliance
partners 148.9 120.3 72.2 24% 67%
Total transaction and processing service
fees revenue $ 2,974.5 $ 2,923.9 $ 2,720.1 2% 7%
Acquiring revenue. Acquiring revenue increased in 2011 compared to 2010 due mostly to lower debit interchange rates as
a result of the Dodd-Frank Act described in the "Regulatory Reform" section above which benefited the growth rate for acquiring
revenue in 2011 compared to 2010 by approximately $26 million or 1 percentage point. Acquiring revenue also benefited from
increases in merchant transactions and dollar volumes, new sales and pricing increases for regional merchants. These increases were
partially offset by decreases resulting from the impact of merchant mix on transactions and dollar volumes (discussed below), the
affect of shifts in pricing mix, merchant attrition and price compression largely related to national merchants and ISO portfolios. In
addition, acquiring revenue was adversely impacted by a card association fee increase which only benefited the third quarter of 2010
and impacted the acquiring revenue growth rate in 2011 compared to 2010 by 1 percentage point.
Transaction growth outpaced revenue growth in 2011 compared to 2010 driven by the factors noted above, particularly
merchant mix, pricing mix and price compression. A greater proportion of transaction growth was driven by the Company's national
merchants which contributed to lower revenue per transaction. The average ticket size of signature based transactions was flat in 2011
as compared to 2010. Transactions in 2010 are not comparable to 2009 due to the items noted in (a) above.
Acquiring revenue increased in 2010 compared to 2009 due to increases in merchant transaction and dollar volumes, new sales
and the card association fee increase noted above. Partially offsetting these increases were merchant attrition and price compression.
The card association fee increase benefited the acquiring revenue growth rate in 2010 versus 2009 by 1 percentage point.
Check processing revenue. Check processing revenue decreased in 2011 versus 2010 due most significantly to lower
overall check volumes from check writer and merchant attrition and the impact of merchant mix resulting from a shift in regional to
national merchants.
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