First Data reports its Merchant Solutions unit (f/k/a the Retail and Alliance Services segment) racked up $945 million in second quarter (Q2/14) revenue, compared to $928 million in Q2/13. Merchant acquiring revenue was up 3% on higher volumes and network incentives, offset by lower yield. Transaction growth was 4%, and credit mix was 71%. The average ticket was $76.89, flat compared to a year ago. Product revenue was down 1% due to the continued decline in check processing, offset by growth in prepaid revenue. During the quarter, Merchant Solutions expanded its distribution effectiveness by adding 17 bank referral agreements, 12 new independent sales organizations, and two revenue sharing alliances.
In the Financial Services segment revenue for Q2/14 rose 6% to $357 million, driven by new business and volume growth. Average active card accounts on file were up 15% compared to the prior year, primarily driven by new card portfolios and organic growth. Debit transactions were up 4% year over year. During the quarter Financial Services renewed more than 225 contracts with financial institutions.
Revenue for the International business unit increased 5% for the second quarter to $448 million, compared to $425 million a year ago. On a constant currency basis, segment revenue was up $27 million, or 6%. Merchant acquiring revenue grew 7% on higher volumes while issuing revenue grew 6% on organic growth and new card portfolios.
During Q2/14 First Data introduced two new solutions for small to medium businesses (SMB), PerkaT and Insightics. The Perka solution is a digital loyalty marketing platform, an alternative to traditional paper and plastic card-based incentive programs. With PerkaT, virtually any merchant can customize and launch a mobile loyalty program that works on all cell phones, creating customer loyalty and driving growth.
Insightics is innovative cloud-based software that unlocks the power of big data behind payment transactions to give SMB merchants the ability to monitor key business metrics affecting their business, better understand customers to engage effectively, and derive more value from marketing and loyalty programs to grow revenue.
Overall, First Dat reported revenue for the second quarter was $2.8 billion, a new record, up $128 million, or 5%, compared to a year ago.
RAM Research predicts First Data’s Merchant Solutions business will top $1 billion in revenue by year-end.
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