First Data 2014 Annual Report Download - page 32

Transaction and processing service fees revenue
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






Acquiring revenue
$ 2,448.1
$ 2,416.6
$ 2,368.7
1 %
2 %
Check processing revenue
249.2
274.3
306.1
(9)%
(10)%
Prepaid revenue
321.9
341.1
306.5
(6)%
11 %
Processing fees and other revenue from alliance
partners
234.3
223.2
217.5
5 %
3 %
Total transaction and processing service fees
revenue
$ 3,253.5
$ 3,255.2
$ 3,198.8
— %
2 %
Acquiring revenue grew slightly in 2014 and 2013 due to growth in merchant transactions and dollar volumes, new sales and pricing increases, primarily due
to regional merchants and network routing incentives, including $12 million of incentives in 2014. These increases were partially offset by decreases
resulting from the impact of merchant mix on transaction and dollar volumes, the effects of shifts in pricing mix, merchant attrition, and price compression.
Transaction growth in 2014 compared to 2013 was driven by our national and ISO merchants, which contributed to lower revenue per transaction.
Transaction growth was also negatively impacted by Walmart's shift to a dual processor strategy in the first quarter or 2014.
Transaction growth outpaced revenue growth in 2013 compared to 2012 driven by the factors noted above, particularly merchant mix, pricing mix, and price
compression. A greater portion of transaction growth was driven by our national merchants which contributed to lower revenue per transaction.
Check processing revenue decreased in 2014 compared to 2013 and in 2013 compared to 2012 due to lower overall check volumes from continued check
writer and merchant attrition.
Prepaid revenue decreased in 2014 compared to 2013 due to the disposition of a noncore transportation payments joint venture, EFS in the second quarter of
2014, partially offset by higher transaction volumes within the open loop payroll distribution program related to existing customers and new business. The
disposition occurred in late May 2014 and had an approximate $30 million negative impact on segment revenue in 2014. Refer to Note 3 "Acquisitions and
Dispositions" to our Consolidated Financial Statements in Part II, Item 8 of this Form 10-K for additional information.
Prepaid revenue increased in 2013 compared to 2012 due to higher transaction volumes within the open loop payroll distribution program related to new and
existing business, higher closed loop transaction volumes as well as higher card shipments. In addition, prepaid revenue increased in 2013 versus 2012 by 4
percentage points due to growth in one of our alliances, resulting from the acquisition of a payment solutions business that occurred in the fourth quarter of
2012.
Processing fees and other revenue from alliance partners increased in 2014 compared to 2013 and 2013 compared to 2012 due to increased volume within
our merchant alliances.
Product sales and other revenue increased in 2014 compared to 2013 due to higher equipment sales and portfolio growth in the leasing business, including
interest income and fees on terminal leases.
Product sales and other revenue decreased in 2013 compared to 2012 primarily due to a decline in terminal sales including lower bulk sales.
Merchant Solutions Segment EBITDA increased in 2014 compared to 2013 from the impact of the revenue items noted above. Expenses were flat in 2014
compared to 2013 as a result of cost reduction efforts, primarily in operations costs, that were reinvested into product investment costs. The EFS disposition
had a negative impact of approximately $15 million on segment EBITDA in 2014.
Merchant Solutions segment EBITDA increased in 2013 compared to the same period in 2012 as a result of overall growth from the revenue items noted
above, slightly offset by increased expenses primarily in provisions for uncollectible receivables recorded in the first and third quarters of 2013 and increased
technology and operations costs including product investments.
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