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First Data Corp. says its second-quarter merchant services revenue grew by 8% over the same period a year ago, but that growth combined with growth in other areas was not enough to keep the transaction processor from seeing a $160.6 million (108.3 million euros) net loss for the quarter ending June 30. That is a reversal from the $228.9 million in net income earned during the same period last year. Merchant services generated $1 billion in second-quarter 2008 revenue compared with $953.2 million in the year-ago quarter. First Data's financial services business, which includes issuer services and the Star debit network, saw a 3% decline in revenue, from $514.8 million in the second-quarter of 2007 to $497.5 million this year. The Greenwood Village, Colo.-based transaction processor attributed the loss, in part, to a $260.3 million increase in interest expenses from debt stemming from its 2007 buyout by Kohlberg Kravis Roberts & Co., a New York-based investment firm (CardLine, 9/24/07). Revenue during the quarter totaled $2.2 billion, up 10% from $2 billion. First Data says it processed 7 billion merchant transactions in the United States during the quarter, an 11% increase from the 6.3 billion a year earlier. Internationally, First Data processed 1.6 billion transactions, a 23% increase from 1.3 billion a year ago. First Data says merchants that use its services globally grew by 18% during the quarter, driven partly by deals in Europe, such as the joint venture between First Data and Allied Irish Banks plc, for card acquiring services in Ireland, the United Kingdom and other European locations. During a conference call with analysts today, Michael Capellas, First Data chairman and CEO, said that while transaction volume and revenue grew during the quarter, the average revenue per transaction was lower than a year ago because consumers increased their spending at First Data's national discount merchants. PIN-debit transaction growth during the quarter grew by 21% compared with the same period last year, outpacing the 8% growth in credit card transactions, First Data said. The company did not release detailed transaction data.
