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First Data Corp.'s merchant-services business, which includes its contracts with independent sales organizations and referrals from partners, generated $1 billion in revenue during the second quarter ended June 30, up 5% from $953.2 million during the same period last year. This segment's operating profit was $109 million, a 58% decrease from $261.1 million. First Data's financial-services segment, which provides issuer services and includes the Star electronic funds transfer network, generated $703.5 million in revenue during the quarter, down about 1% from $714 million a year earlier. Merchant services operating profit fell 27%, to $111.7 million from $153 million. Michael Capellas, First Data chairman and CEO, told analysts during a conference call that more consumers are shifting their spending to national merchants, which generate lower per-transaction revenue (CardLine, 8/14). He also noted that use of debit cards is rising at a higher percentage rate than use of credit cards, and debit transactions generate less revenue than do credit transactions. First Data says it signed 25 ISOs to its roster during the second quarter. However, the company did not disclose how many ISOs it has under contract.
