The turbulent economy's effect on card transaction volumes contributed to a 17.8% reduction in first-quarter net income at Total System Services Inc., to $46.5 million from $56.6 million during the same period last year, TSYS reported late yesterday afternoon. Revenue declined 2.6% for the quarter ended March 31, to $408.9 million from $419.8 million a year ago. Besides the slowdown in transaction activity, currency-exchange rates, losses from discontinued operations and costs related to international expansion negatively affected earnings, Columbus, Ga.-based TSYS says. "What they do, they do well, but the environment they are in" is difficult, says Wayne Johnson, managing director and transaction processing equity analyst with Raymond James & Associates Inc., a St. Petersburg, Fla.-based financial-services holding company. Overall transaction-processing volume during the quarter declined 5.6%, to $1.7 billion from $1.8 billion a year ago. The North America Service segment generated revenues of $268.8 million, down 6.3% from $287 million. The segment processed 1.48 billion transactions, down 6.9% from 1.59 billion. The International Services segment posted first-quarter revenues of $73.8 million, up 5.7% from $69.8 million a year ago. The segment processed 247.9 million transactions, up 14% from 217.4 million. TSYS's Merchant Services segment posted revenues of $75.5 million, up 6.5% from $70.9 million. Adil Moussa, an analyst at Boston-based Aite Group LLC, says TSYS is particularly affected by the economic decline. "Processors are at the mercy of the total volume processed," he says. "The convergence of lower consumer spending and stricter underwriting policies from the banks affect severely the total volume transacted."

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