Paper, plastic, or Internet -- in whatever form, First Data moves the money. One of the world's largest electronic payments processors, First Data serves more than 6 million merchants and 2,000 card issuers in some 35 countries. It provides a variety of secure funds transfer and related services including credit card payment processing, fraud protection and authentication, check guarantee (through subsidiary TeleCheck), electronic bill payment management, and point-of-sale (POS) services. First Data operates through three primary segments: retail and alliance services, financial services, and international. Investment firm KKR owns First Data.
First Data has numerous partnerships with banks in the US and abroad. In 2009 the company teamed up with Bank of America to create Banc of America Merchant Services; it transferred the client base from its erstwhile Chase Paymentech joint venture with JPMorgan Chase to the new payment services provider, one of the largest in the country. (First Data owns 51% of the joint venture, while Bank of America owns 49%.) First Data also provides card processing for Wells Fargo through their Wells Fargo Merchant Services joint venture.
European partnerships include AIB Merchant Services (with Allied Irish Banks) and First Merchant Solutions (with WestLB). In 2011 First Data rebranded its UK business as First Data Merchant Solutions, its first stand-alone international operation. International expansion remains a key focus for the company as customers worldwide shift away from traditional cash and check transactions.
Fees from transaction and processing services make up most of First Data's sales. The tie-up with Bank of America boosted the company's revenues in 2010, but it reported more than $1 billion in losses for the third straight year as expenses related to the joint venture rose as well. Those expenses went down the following year, allowing the company to stem its losses to $516 million. Restructuring charges from layoffs have also impacted First Reseach's earnings. Overall, revenues have been incrementally rising for the past five years, driven by the increasingly common practice of paying for transactions electronically.
The company's strategy for growth includes securing more relationships with banks and independent sales organizations (ISOs) with a broad geographic reach across a wide variety of industries. Partnering with banks serves First Data well, as it provides the company with cross-selling opportunities and allows it to strengthen its existing relationships with a variety of clients. However, consolidations in the banking industry (such as the acquisition of Washington Mutual by JPMorgan Chase) can cut into the company's income. Additionally, new regulations restricting exclusivity (thus encouraging competition) could negatively impact First Research and/or create opportunities to garner new business. – less