First Data 2012 Annual Report Download - page 38

International segment results.
(a) International transactions include VISA, MasterCard and other card association merchant acquiring and switching and debit
issuer transactions for clients outside the U.S. Transactions include credit, signature debit and PIN-debit POS, POS gateway and
ATM transactions. International transactions for the years ended December 31, 2011 and December 31, 2010 reflect an updated
count of international transactions.
(b) International card accounts on file include bankcard and retail.
Summary. Segment revenue in 2012 compared to 2011 was impacted by the items discussed below as well as foreign currency
exchange rate movements. Foreign currency exchange rate movements negatively impacted the total segment revenue growth rate in
2012 by 4 percentage points compared to 2011 and benefited the total segment revenue growth rate in 2011 by 4 percentage points
compared to 2010.
Transaction and processing service fee revenue. Transaction and processing service fees revenue includes merchant related
services and card services revenue. Merchant related services revenue encompasses merchant acquiring and processing revenue, debit
transaction revenue, POS/ATM transaction revenue and fees from switching services. Card services revenue represents monthly
managed service fees for issued cards. Merchant related services transaction and processing service fees revenue represented
approximately 60% for the periods presented and card services revenue represented approximately 40% of total transaction and
processing service fees revenue for the periods presented.
Transaction and processing service fees revenue decreased in 2012 compared to 2011 due to the impact of foreign currency
exchange rate movements. In addition, declines in the card issuing businesses were partially offset by growth in the merchant
acquiring businesses. Revenue in the card issuing businesses declined primarily due to lost business in Germany, Australia, the United
Kingdom and China as well as lower revenue in Greece driven by the economic recession and a strategic decision to exit low-margin
businesses. Partially offsetting these decreases were increased transaction volumes in the card issuing business primarily in Argentina
and new business in Canada. Increases in the merchant acquiring businesses resulted from growth in the merchant acquiring alliances
and direct sales channels primarily in the United Kingdom and Canada. Foreign currency exchange rate movements negatively
impacted the transaction and processing service fees revenue growth rate in 2012 versus 2011 by 4 percentage points.
Transaction and processing service fees revenue increased in 2011 compared to 2010 due to growth in the merchant acquiring
businesses resulting from growth from existing clients in the merchant acquiring alliances and the direct sales channel in the United
Kingdom. The card issuing businesses grew due to new business primarily in the United Kingdom as well as transaction growth in
Argentina and pricing in Australia. Partially offsetting these increases were lost business and lower revenue in Greece driven by the
economic recession and a strategic decision to exit low-margin businesses. Foreign currency exchange rate movements benefited the
transaction and processing service fees growth rate in 2011 versus 2010 by 5 percentage points.
Transaction and processing service fees revenue is driven by accounts on file and transactions. The spread between growth in
these two indicators and revenue growth was impacted by foreign currency exchange rate movements, the mix of transaction types and
price compression. International card accounts on file decreased in 2011 compared to the 2010 primarily due to lost business in China
and the United Kingdom that deconverted in the fourth quarter of 2011.
38
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 $ 1,291.2 $ 1,337.9 $ 1,237.5 (3)% 8%
Product sales and othe
r
391.0 388.8 353.9 1% 10%
Equity earnings in affiliates 36.2 34.6 29.4 5% 18%
Segment revenue
$1,718.4
$1,761.3 $1,620.8
2% 9%
Segment EBITDA $ 483.8 $ 454.3 $ 329.8 6% 38%
Segment margin 28% 26% 20% 2
p
ts 6
p
ts
Key indicators:
International transactions (a) 8,458.4 7,637.9 6,777.8 11% 13%
International card accounts on file (end of
p
eriod) (b) 73.6 75.0 88.8 (2)% (16)%