First Data Corp.’s formation of the Banc of America Merchant Services LLC alliance with Bank of America Corp. in June of last year is paying dividends for the transaction processor.
During a conference call with analysts Aug. 10 to discuss second quarter earnings, Ray Windborne, First Data chief financial officer, cited the alliance as the chief driver of revenue growth for the Atlanta-based company, which owns 51% of the alliance. Revenues totaled $2.61 billion for the period ended June 30, up 18.1% from $2.21 billion during the same period last year.
Merchant Services revenue totaled $883.8 million, up 24.6% from $709.6 million. Banc of America Merchant Services accounted for about two-thirds of that growth, Windborne said. Merchant transactions grew by 9% during the quarter, and First Data added 146,000 new merchant locations, he said.
Prepaid activity also was strong, with revenue increasing by 51% on volume growth driven by both open-loop payroll cards and loyalty cards, Windborne said. “We implemented our payroll card [service] at several large customers in the last 12 months, and higher loyalty card volumes are being driven by innovative campaigns used by retailers,” he said.
Processing revenue, which accounts for 69% of the Financial Services unit’s revenue, was flat year over year when excluding the financial impact from the termination of the Washington Mutual Inc. relationship. Financial Services revenue totaled $351.4 million, down 7% from $378 million when including a $40 million expense resulting from the lost WaMu relationship. (JPMorgan Chase & Co. now owns WaMu.)
As a company, First Data Corp. reported a net loss attributable to the company of $171.2 million for the quarter, down from the $195.9 million loss during the same period last year (
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