U.S. Bancorp’s Payment Services unit posted a 28% gain in net income in the second quarter, in part due to higher merchant-processing volumes.
The unit, one of five major divisions at the Minneapolis-based super-regional bank, produced a $361 million profit versus $282 million a year earlier, or 21% of the company’s $1.75 billion in consolidated earnings, according to financial results released Wednesday. Payment Services includes the Atlanta-based Elavon merchant-acquiring subsidiary; consumer and business credit cards; prepaid cards; debit cards; corporate, government, and purchasing cards; and consumer lines of credit.
“Payment Services revenue growth was driven by seasonally higher credit and debit card revenue as well as higher merchant-processing volumes,” the earnings report says.
Merchant volume totaled $109.1 billion, a 9% increase from $100.4 billion in 2017’s second quarter. Merchant transactions rose 10% to 1.44 billion from 1.31 billion a year earlier. Debit card transaction volume grew 7% to $18 billion while combined consumer and corporate credit card volume increased 8% to $41 billion.
Global merchant-processing services generated $391 million in non-interest income in the quarter, up 4% from $377 million a year earlier. Non-interest income from consumer and corporate payments, including interchange and fees, rose 8% to $512 million.
ATM processing, a big business for U.S. Bancorp that’s part of its Consumer and Business Banking unit, generated $90 million in non-interest income in the second quarter, up 20% from the year-earlier period’s $75 million. The company’s U.S. Bank had 4,725 ATMs as of June 30, down 2% from 4,826 in the year-earlier quarter. But U.S. Bancorp drove 31,269 ATMs in the second quarter, up 2% from 30,604. ATM processing revenue grew primarily from higher transaction volumes, the company said.