Elavon Europe’s topline improves but no return to profitability

Elavon Europe, a subsidiary of US Bancorp and one of Europe’s largest merchant acquirers, has reported a sharp improvement in topline performance in its 2021 accounts, as the travel industry recovers from the pandemic-induced restrictions. However, the business has not yet returned to profitability. 

The company, which has a strong presence in cross-border and multinational transactions, particularly in the airline sector, saw total European payment volume grow by 25% to €105bn in 2021, as travel restrictions were lifted. This still falls short of the €110bn recorded in 2019. Europe represents about 25% of Elavon’s global volume.

Total Elavon Europe revenue grew by 24% to €329m, with merchant processing fees rising 18% to €222m. Take rate dropped 1 bp to 21 bps. The company’s equipment rental business, mainly the provision of payment terminals, grew 7% to €26m. 

Pre-tax losses narrowed to €59m from €74m in the previous year, but still remain below the €44m pre-tax profit made in 2019. Despite the challenging trading conditions, the company continues to invest in its European business as a “key enabler of US Bancorp’s international growth strategy.” Elavon’s new European President Hemlata Narasimhan, a former BCG consultant and former executive at Visa, was appointed in August 2022.

Elavon’s business is focused on Ireland (its European HQ), UK, Poland, Norway and Germany. As can been see from the distribution of merchant receivables, the UK and Ireland account for the bulk of customers by location. 

Following the £232m acquisition of Sage Pay in 2020, Elavon now has a significant presence in the UK and Irish SME sector, and the integration of Opayo (as it has rebranded Sage Pay) is well advanced, with increasing merchant acquiring volumes expected. 

Elavon’s focus on European airlines, while potentially risky, has been somewhat mitigated through trimming its exposure. The total value of tickets sold but not delivered at the end of 2021 was €2.3bn, compared to €2.7bn at the end of 2019, with €151m held in merchant escrow. Additionally, the company has introduced a new transaction risk analysis tool, which it claims is the first in Europe to offer SCA exemptions on transactions up to €500.

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