Priority Technology Focuses on Growing Segments as Subscription-Billing Business Shrinks

Transaction and dollar volume for Priority Technology Holdings Inc. managed to grow in the first quarter despite the downsizing of the merchant processor’s formerly large online subscription-billing business.

Alpharetta, Ga.-based Priority reported Monday that merchant bank card processing volume rose 8.8% to $9.9 billion versus $9.1 billion in 2018’s first quarter. Bank card transactions increased 6.7% to 117.9 million from 110.4 million a year ago.

Consolidated revenue, however, fell 13.5% to $100 million from $115.6 million in 2018’s first quarter, and the company posted a net loss of $6.45 million compared with a $3.18 million loss a year earlier. The wind-down in the high-margin subscription business drove the decline, with e-commerce billing revenues totaling only $3.9 million, off 88% from $31.7 million in the prior-year period, when revenues from that merchant segment peaked.

Priority pared its subscription business in the face of a revised Mastercard Inc. rule tightening disclosures involving so-called negative-option billers. After getting a consumer to sign up for a trial subscription for a product or service, such billers automatically charge the customer’s card on file after the trial ends until the consumer cancels. The rule change, which took effect in April, requires merchants to gain cardholder approval at the end of the trial before they start billing.

Now Priority is setting its sights on new volume from other consumer-oriented merchant segments as well as integrated payments and commercial payments. In March, Priority announced an operating partnership with payments provider Yapstone Inc. to serve property managers.

“Core acquiring remains consistent, with strong merchant boarding trends throughout the quarter, and market adoption of our commercial payments platform is accelerating,” Tom Priore, Priority’s executive chairman and chief executive, said in a statement.