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This article appears in the July 30, 2009, edition of ISO&Agent Weekly.
Global Payments Inc.'s ISO performance buoyed the payment processor's fourth-quarter 2009 and year-end results, the company announced last week.
During the fiscal year, Global Payments generated $1.1 billion in North America merchant services revenue, up 10.2% from $998.5 million in fiscal 2008. Garcia cited the performance of ISOs and the company's direct processing agreements with larger merchants as the primary causes of the improvement.
"We're certainly benefiting from a direct business that had a pretty reasonable sales year in 2009," Paul R. Garcia, Global Payments chairman and CEO, told analysts during a conference call last week, something he expects also will benefit the processor in its 2010 fiscal year.
"We are still anticipating nice growth in the ISOs and not a change in trends," he told one analyst. "Our merchant-transaction growth rates for the [fourth] quarter across all of our geographies were generally about as we expected."
Global Payments' U.S. transaction volume grew by 16%, Garcia said. The company did not release details of that volume.
Global Payments will benefit from a shift in consumer spending made with credit cards to debit cards, Garcia predicted.
A recent study by Pulse, a Houston-based electronic funds transfer network owned by Discover Financial Services, found that debit card issuers predict a 7% transaction-growth rate each for PIN and signature-debit cards this year.
In April, Visa Inc. said during its fiscal second quarter U.S. debit-payment volume exceeded credit card payments for the first time in the company's history, as the economy continued to drive more consumers to use debit cards for everyday purchases.
More than 50% of Global Payments' U.S. volume involves either PIN or signature-debit transactions, Garcia said.
"We do benefit from that, and we are seeking a pickup in debit more quickly than credit," he said.
Global Payments experienced its largest increase in revenue during the quarter and fiscal year in its international business. For the quarter, international merchant services generated revenue of $92.9 million, up 156% from $36.3 million a year earlier.
Global Payments last week reported fiscal fourth quarter net income of $37.6 million, down 7.8% from $40.8 million during the same period last year. Revenues totaled $402 million, up 16.9% from $343.8 million. Atlanta-based Global Payments' fiscal year ends May 31.
Full-year revenue was $1.6 billion, up 20.3% from $1.33 billion in fiscal 2008. Net income for the fiscal year was $37.2 million, a 77.1% drop from $162.8 million.
Garcia also told analysts that almost all of the company's products are performing well with the exception of the funds-transfer business. "The money-transfer business continues to face challenging macroeconomic and immigrant-labor trends," he said.
Global Payments had a $147.7 million charge against its money-transfer business in fiscal 2009, a spokesperson says. The processor's North America merchant-services business, however, continued to grow.
For the fiscal year, international revenue totaled $355.5 million, up 169% from $132.1 million. North America fourth-quarter revenue totaled $275 million, up 2.9% from $267.2 million a year ago.
