First Data stumbles again in the US

By August 2, 2016Bitcoin Business

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While First Data posted better-than-expected results in its third quarter as a public company, revenue in the largest US-based payments processor’s Global Business Solutions (GBS) unit was flat year over year (YoY) on a constant-currency basis.

That’s a worrying sign because GBS is First Data’s biggest segment and challenges in North America, its largest market, were to blame for the lackluster performance.

North American revenue isn’t improving despite transaction growth. The segment is declining. In both Q1 and Q2 2016, First Data’s transactions in the North American segment grew by 7%, but revenue declined by 2% constant currency YoY as a result of lower implied revenue per transaction. This reflects underperformance in the company’s direct small and mid-size business (SMB) portfolio relative to other parts of GBS. It’s problematic that despite increased card usage and growing transaction totals, the firm’s revenue in its largest segment isn’t improving.

That could indicate that ongoing issues are broader than they were in the past. In Q1, First Data CEO Frank Bisignano noted that the firm’s North America declines were largely due to attrition within its small-business portfolio, which pushed First Data to focus on US small business initiatives to grow. But the firm’s consistent mediocre results in the segment might point to broader issues in the way First Data works with its merchant partners in the US.

But First Data continues to focus on an SMB turnaround plan, which should improve North American merchant business in the second half. Bisignano identified a few of the firm’s plans: Lower attrition: First Data invested in better contact center technology in order to improve its customer service offerings and better serve the merchants with which […]

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