First Data Continues to Grow Value-Added Services

by Raymond Pucci 0

It’s more than just about payments. Enter the continued growth of value-added services from merchant acquirers and other payments processors. As the following article reports, First Data is focusing on providing business tools and related services to its merchant clients.

There is a lot of opportunity in the payments space, according to one of the biggest transaction processing companies.

“We’re in the first third of the game,” First Data (FDC) CEO Frank Bisignano said. “If you look at what’s transpired over the last 40 years and all that’s transpired over the past three years, the past three years have surpassed everything that’s occurred.”
First Data, which was the biggest initial public offering in 2015, handles $2.2 trillion of transactions per year on behalf of retailers, banks and other businesses that need to process a payment.

Companies from Visa (V) and Mastercard (MA) to Paypal (PYPL) and Square (SQ) have risen lately on the long-term secular shift toward electronic payment processing.

While lesser-known in the $900 billion industry, First Data has dominated areas like merchant acquisitions (selling credit card terminals to merchants), fraud management, and processing. And it’s looking to double down on the growth opportunity, recently announcing the acquisition of Card Connect for $750 million to build scale and to invest further in value-added services.

Bisignano, former co-COO at JPMorgan Chase (JPM), said the runway of opportunity remains strong, especially for value-added services. For example, with the company’s technology, clients can provide personalization, payment choices, and loyalty recognition for consumer transactions across multiple device.

“We’re a big enabler of e-commerce, but we love corner stores. We love pizzerias. We love bringing tools to them to let them do business better,” Bisignano said. “We built a lot of applications that allow consumers to buy from their handheld and go pick up their product in store. And so there’s been a rotation to e-commerce and our job is to enable that, to digitize that, and to support brick and mortar players.”

Payments transactions generate volumes of data about sales trends, customer behavior, and other useful information that’s crucial to running any business. More powerful, yet less expensive computer power makes possible turning that data into analytical tools needed by time-strapped business owners and operators. Payments processors will create longer lasting client relationships by supplying businesses with these services that help them focus on their operations and strategy, beyond the payment transaction.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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