First Data 2012 Annual Report Download - page 37

compared to 2010 due to debit issuer transaction growth from existing customers substantially offset by net lost business and price
compression.
Debit issuer transactions in 2012 decreased compared to 2011 due to lost business, including the loss of a large financial
institution that completed its deconversion in the third quarter of 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. Debit issuer
transactions grew in 2011 compared to 2010 resulted from growth of existing clients due in part to the shift to debit cards from cash
and checks, and new business partially offset by lost business.
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 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.
Output services revenue increased in 2011 compared to 2010 due to net new plastic and print business and growth in plastics
volumes from existing customers partially offset by lower print volumes from existing customers and price compression.
Other revenue. Other revenue consists mostly of revenue from remittance processing, online banking and bill payment services,
voice services as well as information services. 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.
Other revenue was flat in 2011 compared to 2010 due to a decrease in volumes related to remittance processing and information
services mostly offset by an increase in online banking and bill payment services volumes as well as net new business primarily in
remittance processing.
Product sales and other revenue. Product sales and other revenue increased in 2012 compared to 2011 primarily due to new
software license sales and professional services for programming.
Product sales and other revenue decreased in 2011 compared to 2010 due most significantly to higher contract termination fees
recognized in 2010 as well as a decline in professional services revenue resulting from projects that were completed in 2010.
Segment EBITDA. Financial Services segment EBITDA increased in 2012 compared to 2011 due most significantly to the
revenue items noted above partially offset by a sales tax recovery recorded in 2011.
Financial Services segment EBITDA increased in 2011 compared to 2010 due most significantly to decreased technology and
operations costs resulting from reduced headcount and operational efficiencies, and a sales tax recovery. In addition, 2011 also
benefited compared to 2010 from higher expenses in the prior year due to a billing adjustment recorded in the second quarter of 2010.
These increases were partially offset by the adverse impact of the items noted in the revenue discussion above. The decrease in
technology and operations costs, the sales tax recovery and the prior year billing adjustment benefited the segment EBITDA growth
rate in 2011 versus 2010 by 11, 2 and 1 percentage points, respectively.
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