Falling Prices Drag Down Global Payments' Fees

By Wolfe, Daniel | American Banker, January 11, 2010 | Go to article overview

Falling Prices Drag Down Global Payments' Fees


Wolfe, Daniel, American Banker


Byline: Daniel Wolfe

Large retailers' efforts to attract more business are hurting transaction fee revenue at Global Payments Inc.

The Atlanta processor said last week that some of its biggest clients in Canada are slashing prices, a move that is boosting transaction volume at big retailers, but driving down volume at Global's smaller clients, which generally pay higher rates.

"Our Canadian business continues to be affected by overall macroeconomic conditions, driving large national merchants to heavily discount merchandise and thus take a larger proportional share of transactions away from the small and midsize merchants that provide higher revenue," Paul Garcia, Global's chairman and chief executive, said in a conference call Thursday, according to a transcript.

David Mangum, Global's chief financial officer, cautioned that this trend, which was somewhat offset by exchange rates, may be specific to Global's client base. "The overall transaction growth frankly for Canada is about flat for the quarter on a year-over-year basis," he said during the call.

In the U.S., average transaction amounts were down 9%, from the prior year, but flat from the prior quarter, Garcia said. "This is actually encouraging, but it's too early to determine whether this portends for a positive trend."

For Global's fiscal second quarter, which ended Nov. 30, its revenue grew 12%, to $409 million, from a year earlier. Its net income grew 28%, to $62. …

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