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This article appears in the May 21, 2009, edition of ISO&Agent Weekly.

First Data Corp. says it added 21 ISOs to its roster in the first quarter, further strengthening the processor's position in the industry. At the end of 2008, the Greenwood Village, Colo.-based company said it worked with more than 400 ISOs, according to its 2008 annual report. At the end of 2007, First Data said it worked with 163 ISOs. Capellas did say if the company lost ISOs, too.

The addition is likely welcome news at First Data, as it saw its first-quarter transaction volume for domestic debit and credit transactions dip to 5.6 billion for the quarter ended March 31, a 13.8% decrease from the 6.5 billion transactions for the same quarter a year ago.

During a conference call with analysts last week to discuss the first-quarter results, Phil Wall, First Data chief financial officer, said if the effects of the dissolution of the Chase Paymentech joint venture with JPMorgan Chase & Co. late last year were removed, First Data's first-quarter transaction activity would have increased 5% from a year earlier.

Citing "broad slowdowns in consumer spending," First Data reported a $231.3 million first-quarter loss, nearly $10 million more than the $221.7 million loss the processor experienced during the same period last year.

Revenue totaled $2.07 billion, down 2% from the $2.12 billion result a year ago. The company's retail and alliance services unit, which provides processing and acquiring services, generated revenue of $1.2 billion, up 9% from $1.1 billion.

Consumer Spending

In its quarterly U.S. Securities and Exchange Commission earnings report, First Data noted that, in terms of consumer spending during the quarter, not as many consumers shopped at large discount merchants as in the fourth quarter of 2008. Large discount merchants often can strike processing deals that have better rates for merchants at the expense of profit margins for a processor.

Decisions by many U.S. card issuers to reduce credit limits, close accounts and tighten issuing standards also affected First Data's financial-services business, the company said.

Same-store transactions grew by 5.5% in March compared with March 2008, said Michael Capellas, First Data chairman and CEO. First Data did not provide detailed transaction tallies. Same-store sales is a reflection of growth at merchants that have been in business for at least a year.

When considered with the 6% January growth rate and the 3% growth in February, Capellas said there is some evidence of "stabilization" in same-store transactions.

"It's still too early to draw any conclusions about whether this level of transaction growth will continue for the balance of the year, but for the quarter, many [merchant] categories increased same-store transactions," Capellas told analysts.

PIN-Debit Growth

ISOs wondering if consumers continue to favor PIN-debit transactions might take note: PIN-debit growth "is still substantially outpacing non PIN-debit transactions," Capellas said.

First Data's same-store PIN-debit transaction growth rate was 9% in the first quarter compared with the same quarter last year, he said. Combined credit and signature-debit volume grew just 2%, Capellas said.

First Data's other business units also reported their first-quarter results.

Financial services, which provide products and services to financial institutions, generated $544.2 million in revenue, down 2.6% from $558.5 million. Revenue from First Data's international business fell 16%, to $368.7 million from $439.1 million.

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