Eye on Earnings: Google Checkout Adds More Merchants

Google Inc. gave a progress report about its Google Checkout payment services launched in mid-2006 and processors and banks heavily involved in the payments business reported third-quarter earnings last week. ? Search-engine leader Google's Google Checkout online payment service added PetSmart, Drugstore.com, Shoebuy.com, and the NHL Store as merchants in the third quarter, senior vice president of product management Jonathan Rosenberg said in a conference call with analysts Thursday. “We've got a big chunk of top 500 merchants,” he said as reported in a transcript of the call provided by the Seeking Alpha investor service (www.seekingalpha.com). “I think the real story that is important there is that many of the advertisers that we are working with, such as Jockey, are reporting much, much higher click-through rates. They achieved as much as 60% higher with Checkout and they decreased the cost-per-click by over 31% with Google AdWords [a Google advertising service] and Google Checkout.” Mountain View, Calif.-based Google did not disclose the total number of merchants using Checkout. A spokesperson told Digital Transactions News by e-mail Friday that the retailers identified by Rosenberg were “just a few examples” of the merchants Google added in the third quarter. Checkout now has “more than a third of the top 500 online retailers,” he says. In all, Checkout has signed “millions of buyers” and “tens of thousands of merchants,” he adds. ? Fifth Third Bancorp, owner of big merchant acquirer Fifth Third Processing Solutions, Friday reported $253 million in third-quarter processing revenues, including credit card interchange, up 16% from $218 million a year earlier. “We expect growth in merchant processing to approximate current levels as we continue adding large, national merchant accounts,” the Cincinnati-based bank's earnings report says. The kicker: processing expenses rose 25% to $105 million from $84 million in 2006's third quarter. The report attributed the increase to “similar growth in transaction volumes.” ? JPMorgan Chase & Co., 51% owner of No. 1 merchant acquirer Chase Paymentech Solutions LLC, Wednesday reported third-quarter bank card charge volume of $181.4 billion, up 8% from $168.7 billion in 2006's third quarter. Transaction volume grew 9% to 4.99 billion from 4.60 billion a year earlier. Nine-month charge volume was $524.7 billion on 14.3 billion transactions, up 9% and 8%, respectively, from the 2006 period. First Data Corp. owns the other 49% of Chase Paymentech. Chase also said it “successfully in-sourced” its credit card processing platform. Chase had been using Total System Services Inc. to process its card transactions, but now is doing the processing itself using licensed TSYS software. ? Metavante Corp., the bank and payment processor soon to be spun off from Milwaukee-based banking company Marshall & Ilsley Corp., posted record revenue of $406.9 million in the third quarter, up 8.9% from $373.8 million a year earlier, M&I reported. Metavante's segment income grew 25.2% to $51.6 million from $41.2 million in 2006's third quarter. M&I shareholders are scheduled to vote Thursday on the proposed spinoff to bank shareholders and private-equity firm Warburg Pincus LLC, which will have a 25% stake in Metavante. ? Alliance Data Systems Corp., in likely its last full quarter as a public company, Wednesday reported third-quarter revenues of $575.5 million, up 24% from $506.6 million a year earlier. Net income for the merchant processor, private-label credit card issuer, and marketing-services provider fell 40% to $29.1 million from $48.8 million in the 2006 period on one-time merger expenses and other costs. Adjusted pre-tax operating income grew 30% to $172.8 million. Dallas-based Alliance Data says its $7.8 billion buy-out by an affiliate of private-equity firm The Blackstone Group, which stockholders approved in August, is on track as planned for a fourth-quarter closing.