Quarterly Processor Roundup: PayPal, Chase Paymentech, TSYS

Growth in transaction volume slowed at online payment processor PayPal Inc. in the second quarter, with total transactions for the period reaching 143.3 million, up 27% from the year-ago quarter, according to data released last week by eBay Inc., PayPal's San Jose, Calif.-based parent company. That compares with year-over-year growth of 35% in the first quarter and 40% in 2005's fourth quarter. Second-quarter volume actually slipped from 149.2 million in the quarter ended March 31. The dollar value of PayPal transactions hit $8.86 billion, virtually flat with the first quarter and up 37% from the same period in 2005. (Both transaction and dollar value statistics exclude any traffic through PayPal's online gateway business). As a result, the average PayPal ticket rose to $61.80 from $58.77 in the first quarter and $57.16 in the year-ago period. The processor, however, appears to be making some headway in its 2-year-old campaign to derive more processing business from online merchants rather than from auction marketplaces such as eBay. Auctions accounted for 65% of PayPal's traffic in the quarter, down from 67% in the first quarter and from 70% a year ago. PayPal reports 113.7 million accounts, up 44% from the same quarter last year, of which 29.5 million are considered active (at least one transaction during the quarter), compared to 22.9 million in 2005's second quarter. PayPal earned 3.73% on transactions (including the gateway business), with an expense rate of 1.02%, both little changed. Its loss rate amounted to 0.27% of dollar volume, down from 0.29% in the first quarter. In other news, New York City-based JPMorgan Chase & Co. reported its 51%-owned merchant-acquiring unit, Chase Paymentech Solutions, processed 4.48 billion transactions in the second quarter, up 18% from 3.80 billion in 2005's second quarter. Bank card charge volume totaled $166.3 billion, up 18% from the year-earlier period's $141.2 billion. Processor First Data Corp. owns the other 49% of Chase Paymentech. Columbus, Ga.-based processor Total System Services Inc. reported net second-quarter income of $57.4 million, up 13% from $50.6 million a year earlier. Total revenues grew 4.6% to $429.2 million from $410.2 million in 2005's second quarter. Billable authorizations grew 9.8% from the year-earlier quarter to 1.3 billion, while transaction volume grew 8.4% to 1.4 billion. TSYS reported 366.5 million total accounts on file in June, down 5.7% from 388.6 million a year earlier. The processor in June lost Citigroup Inc.'s Sears retail card and MasterCard file and will lose the consumer card business of its biggest customer, Bank of America Corp., in October (Digital Transactions News, Jan. 18). Coming onto TSYS's files, however, are Capital One Financial Corp., Canada's TD Bank Financial Group, a large retailer, and Wachovia Corp., which is reentering the credit card business as a direct issuer.