Usio Manages To Grow Revenues Despite a 26% Decline in Payment Volume

Usio Inc. pulled off a 19% increase in revenues and reduced its losses last year despite a 26% drop in total payment volume processed, according to a new financial filing from the merchant processor.

San Antonio, Texas-based Usio provides payment-facilitator services, credit card processing, automated clearing house payments, prepaid card management, and output services for billers. Those business lines generated $82.6 million in revenues last year, a 19% increase from $69.4 million in 2022.

“In 2023, we processed $5.3 billion for all payment types, which was down 26% from the prior year volume of $7.2 billion total dollars processed due to our exit from the crypto space and attrition in legacy credit card processing portfolios driven by challenges competing in the independent sales organization, or ISO, market while we focus on our payfac distributed sales force and independent software vendor, or ISV, market,” the company said in its annual report for 2023 filed Wednesday. “We believe this strategy will drive superior results over time.”

Payfacs, or payments facilitators, are operations that enable transactions for merchants and other players through the payfac’s own merchant account. Independent software vendors, or ISVs, specialize in incorporating payments capability in the business software they develop.

Total transactions processed fell 9% to 37.2 million, with ACH transactions down 20% from 2022. Returned-check transactions declined by 15% year-over-year.

Credit card dollars processed in 2023, however, increased by 6% and credit transactions rose 9%. “Both the credit card dollars and transactions processed represent all-time records for the company,” the report says. Usio’s prepaid business saw big growth in 2023, with load volume up 76% and transaction volume increasing by 52%.

The company reduced its net loss to $500,000 from 2022’s loss of $5.5 million. “The decrease in net loss was primarily related to our strong revenue growth driving increased gross profits versus the prior year,” the report says, noting the revenue increase outpaced growth in selling and general and administrative expenses, in addition to “significant improvements” in interest income.

“We made progress transitioning to a primarily payfac portfolio, with payfac revenues up 25% for the year and now comprising a much larger proportion of our credit card business, which should support stronger future growth,” Usio chairman and chief executive Louis Hoch said in a statement. “And, our ACH business has turned the corner. In the fourth quarter, ACH revenues grew 4%, which enabled us to post full-year ACH revenue growth and to build momentum headed into 2024.”