Payment Data Systems Inc. said the loss of a major client drove down its revenue in the second quarter.
The payment processor said revenue fell 14% from a year earlier, to $659,000. Its net loss increased 43%, to $491,000.
Michael R. Long, Payment Data's chairman and chief executive, said in an interview Friday that the main factor in the decline was the loss of the San Antonio company's biggest client, a large Hispanic marketing firm that generated about 20% of its revenue.
Mr. Long said the client, which he did not name, had agreed to renew its contract with the processor, but Payment Data's sponsoring bank would not agree to underwrite the transactions. Payment Data must be sponsored by a banking company to send transactions across a card network.
Mr. Long said the sponsor, which he would not name, had doubts about the client's financial stability. "The sponsor was very finicky and risk-averse. They wanted to take the safe bet," he said.
However, "I don't consider the client a risk," he said. "They are not in any financial trouble."
The sponsor said it would underwrite transactions if the client would put aside a "seven-figure" reserve, but the client did not want to do so, Mr. Long said.
Payment Data signed 27 new merchant customers in the quarter, but "a 20% revenue hit is hard to come back from," Mr. Long said.
