Payment Methods

First Data Edges 1Q Sales Estimates, Unveils Alipay Pact

Largely meeting expectations for the first quarter, First Data’s Chief Executive Frank Bisignano said the company is working to boost its U.S. JV acquiring business, with the payment processing company working closely with all three banks to improve results, and is confident the company will meet its guidance for 2017.

Speaking during a conference call to discuss first quarter results with Wall Street, Bisignano said he is “confident that the current weakness is transitory.”

The latest commentary came as the firm posted results for a quarter that saw a flurry of deals and joint ventures. The Monday earnings report was capped off by one rather big announcement, heralding a push by Alipay into the U.S. market, focusing on firms that use First Data’s Clover platform.

A bit about the headline numbers. For the first quarter, First Data reported adjusted earnings per share of $0.28 and revenue of $1.7 billion. That essentially met expectations on earnings, though revenues were slightly higher than projections by about $10 million.

And, said CEO Bisignano, the company is on track to meet expectations for the remainder of the year. Part of that confidence comes from a number of areas where the company has seen improvement across segments, as Bisignano said that the company has noted “better salesforce and merchant retention” tied to its North American Global Business Solutions segment. Taken as a whole, that segment saw revenues of $971 million, which was up 3 percent on an adjusted basis, and North America contributed $751 million. A bit more granularity showed that Latin America had revenues of $59 million, up 52 percent in constant currency, marked by strength in Brazil and Argentina.

Transaction growth was steady, with 7 percent growth in North America, a trend that has taken root over the past four quarters.

Credit and retail processing in North America helped buoy the financial solutions segment, where revenues from the region were up 1 percent, and the business, globally, gained 2 percent. Accounts on file, again for North America, grew by 7 percent.

On the ISV front, said the executive, progress in Clover, though “it is still early days,” has had First Data log “solid interest from developers,” with ISVs signed up, including Breadcrumb and Flywire. Clover, said Bisignano, has helped with attrition rates.

Amid the question and answer session with analysts, and in reference to a query on PSD2, CFO Himanshu Patel stated that the transition here is one that has come “on the GBS side. We’re viewing it as another payment type. So we offer merchants many ways to accept payments … which will be one additional item there. And I think we’re fine with that. And I think on the GFS side, which is half of our European revenue … it could create some revenue opportunities as well.”

In other deals called out by management, First Data inked a partnership with Jack Henry earlier in the month — Bisignano said the deal highlighted the “collaborative nature” of First Data and that the transaction represents a “takeaway from competitors in the network and card processing space, as well as an outsourcing win for First Data.”

What’s more, the CEO said First Data expanded its partnership with First Citizens Bank, started processing installment loans from Barclays in the United States and began processing loans on behalf of Citizens Bank for their Vivint Smart Home Loan portfolio. He said the payment processing company also recently expanded its relationship with McDonald’s, by payment-enabling their order-ahead app, and is partnering with Sunoco on the roll-out of their mobile payment strategy.

Separately, and after market closed, First Data and Alipay stated that they’d struck a deal that will let the latter’s consumers shop at several million merchants served by the former in the U.S.

The initial rollout, Bloomberg News reported, will start with firms deploying the aforementioned Clover.  As the newswire stated, Alipay has been seeking a greater presence in the U.S. as part of a movement on a global scale, with a focus on mobile wallet usage.

The scale is significant, putting Alipay alongside Apple in terms of presence, where Apple has 4.5 million U.S. sites.

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