Saturday , August 17, 2019

Buoyed by Its ISV Strategy, First Data Eyes a Joint-Venture Resurgence

Processor First Data Corp.’s strategy of providing payments integration to independent software vendors appears to be yielding results. The Atlanta-based company said it signed 94 ISVs in the second quarter.

That, along with good growth in its direct-sales channel, contributed to the 17.1% growth in second-quarter revenue in First Data’s merchant business, called Global Business Solutions.

“Our differentiated solutions continue to gain market share,” Frank Bisignano, chairman and chief executive, told analysts during a conference call Monday morning. First Data launched the Integrated Solutions Group in 2017 to grow its ISV-related business. “We’ve had great momentum to date,” Bisignano said.

He cited a June announcement that merchant onboarding to First Data by Revention, a point-of-sale system developer for the hospitality industry, includes use of the Bolt point-to-point encryption service created by CardConnect, an ISV First Data purchased in 2017 for $750 million.

The Clover Go contactless, chip, and mag-stripe card reader available to SMB users.

One reason for First Data’s optimism is that so many ISVs have yet to integrate payments, Bisignano said. “It’s still a very, very large, untapped population,” he noted. There are ISVs that are monetizing payments that were not doing so previously, he said. First Data also is taking market share, partly because of offerings from CardConnect as well as BluePay, he said. First Data purchased independent sales organization BluePay Holdings Inc. in December.

First Data’s own Clover POS system is contributing, too, executives said. It’s now processing more than $65 billion in annualized payment volume from merchants using the Clover device, which is optimized for small and mid-size merchants. In June, First Data said Clover had $60 billion in annualized payment volume. Bisignano said the next version of Clover is in development, and he told analysts to watch for updates over the next 18 months.

In related news, First Data said its joint-venture business, which includes merchant-boarding and processing deals with Wells Fargo & Co., Bank of America, and PNC Bank, is stabilizing, in part because of a digital onboarding service inaugurated with the joint ventures.

Already, the Wells and BofA joint ventures offer the onboarding service and PNC is expected to offer it in coming weeks, Bisignano said. “Merchants will get a significantly improved signup and onboarding experience,” he said. Converting the formerly paper-based onboarding process can save merchants time and expedite the application review.

“Our bank partners get to leverage one of their most valuable assets, their highly-trafficked Web sites,” Bisignano said. “This is just the beginning of a total digitization plan that we will eventually offer to all of our distribution partners.”

Overall, First Data’s revenue from its Global Business Solutions unit in the second-quarter came to $1.44 billion, up 17.1% from $1.23 billion in 2017’s second quarter.

Its Network Security and Solutions unit, which includes the company’s debit, prepaid, ACH, security, and related services, had revenue of $371 million, a 2.6% decrease from $381 million a year ago. In its Global Financial Solutions segment, which provides issuer service, revenue was $414 million, a 3% increase from $402 million.

For the company as a whole, First Data had revenue of $2.45 billion in the second quarter, down 19.1% from $3.03 billion in last year’s second quarter. It posted net income of $402 million, a 65.4% increase from $243 million.

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