First Data 2012 Annual Report Download - page 34

Retail and Alliance Services segment results.
(a) Domestic merchant transactions include acquired VISA and MasterCard credit and signature debit, PIN-debit, electronic benefits
transactions, processed-only and gateway customer transactions at the POS. Domestic merchant transactions reflect 100% of
alliance transactions.
Transaction and processing service fees revenue.
Acquiring revenue. Acquiring revenue increased in 2012 compared to 2011 and 2011 compared to 2010 mainly from lower
debit interchange rates as a result of the Dodd-Frank Act described in the “Regulatory Reform” section above which benefited growth
for acquiring revenue by an estimated $75 million or 3 percentage points and $26 million or 1 percentage point, respectively.
Acquiring revenue also benefited from increases in merchant transactions and dollar volumes, new sales and pricing increases for a
certain segment of merchants. These increases were partially offset by decreases resulting from the impact of merchant mix on
transactions and dollar volumes, the affect of shifts in pricing mix, merchant attrition and price compression. In addition, acquiring
revenue in 2011 was adversely impacted compared to 2010 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.
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 4% 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.
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 decreased
slightly in 2012 as compared to 2011. The average ticket size of signature based transactions was flat in 2011 as compared to 2010.
Check processing revenue. Check processing revenue decreased in 2012 versus 2011 and 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.
Prepaid revenue. 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.
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Year ended December 31, Percent Chan
g
e
(in millions) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Revenues:
Transaction and processing service fees $ 3,198.8 $ 2,974.5 $ 2,923.9 8% 2%
Product sales and other 404.0 407.5 390.9 (1)% 4%
Segment revenue
$ 3,602.8
$ 3,382.0 $ 3,314.8
7% 2%
Segment EBITDA $1,594.8 $1,407.5 $1,322.3 13% 6%
Segment margin 44% 42% 40% 2
p
ts 2
p
ts
Key indicators:
Domestic merchant transactions (a) 37,362.6 35,619.8 33,543.8 5% 6%
Year ended December 31, Percent Chan
g
e
(in millions) 2012 2011 2010 2012 vs. 2011 2011 vs. 2010
Acquiring revenue $2,368.7 $2,204.4 $2,169.7 7% 2%
Check processing revenue 306.1 330.1 370.7 (7)% (11)%
Prepaid revenue 306.5 291.1 263.2 5% 11%
Processing fees and other revenue from
alliance partners 217.5 148.9 120.3 46% 24%
Total transaction and processing service fees
revenue $3,198.8
$2,974.5 $2,923.9
8% 2%