Fidelity National Information Services on July 21 reported revenue of $630.6 million for its Payment Solutions unit for the second quarter ended June 30, down 0.08% from $631.1 million during the same period last year.
Excluding its check businesses, the unit’s revenue increased 4.5%, Fidelity said in a statement. “Debit and credit transaction volumes continue to trend favorably,” Mike Hayford, Fidelity chief financial officer, told investors during a conference call. Fidelity did not break out its debit and credit transactions volumes.
International Solutions revenue increased by 8%, to $200.7 million from $185.8 million during last year’s second quarter, driven primarily by increased card-processing volumes in Brazil, Fidelity said.
Fidelity announced during the earnings call that it is close to finalizing an agreement with Brazil-based Bradesco Bank that would expand a previous partnership in which Fidelity provides card processing and other financial services.
Gary Norcross, Fidelity chief operating officer, told investors during the call that the Financial Reform Act President Obama signed into law July 21 would have “minimal impact” to the company’s bottom line.
However, he indicated Fidelity’s NYCE network could benefit from the law’s prohibition on brand exclusivity on debit cards. We absolutely do think there’s some upside with our NYCE network, and frankly until some of this unfolds a little further, it is hard to gauge all of that,” he said. “But we think there’s some opportunities for upside.”
The new interchange regulations, which take effect in the third quarter of 2011, are primarily debit-focused and apply only to banks with more than $10 billion in assets, Norcross noted. Since interchange is primarily a pass through for Fidelity, there is minimal impact to the bottom line.
“We expect the Durbin amendment provisions, which include priority routing and exclusivity limitations, to be neutral to [Fidelity] overall, as any potential downside related to changes in merchant routing is expected to be offset by increased volume processed on the NYCE network,” Norcross said.
Fidelity acquired Metavante Corp. and its NYCE electronic funds transfer network last October.
The new restrictions on overdraft fees will have minimal impact on Fidelity, he added. The restrictions from the Federal Reserve Board took effect July 1 and require debit cardholders to opt in to overdraft-protection programs.
“While we provide the technology that enables banks to process on consumer overdrafts, we do not receive any portion of the overdraft fees,” Norcross said. “Historically, changes that require banks to refresh or upgrade systems to comply with new regulations have created opportunities for [Fidelity] to provide new services to clients.”
As a company, Fidelity reported second quarter net income of $176.9 million, up 56% from $113.4 million for the same time period in 2009. Adjusted revenue totaled $1.29 billion, up 2.4% from $1.26 billion.