Tag: Lloyds Cardnet

Lloyds Cardnet returns to growth

Geoffrey BarracloughLeave a comment

Lloyds Cardnet, the bank’s merchant services joint venture with Fiserv, returned to growth in 2025 although the recovery came at a price. Volume grew for the first time since 2020, cashflow was strong and the business was able to pay a dividend to its parents. But income per transaction fell sharply. 

Cardnet is owned 51% by Lloyds and 49% by Fiserv and mainly serves the bank’s business customers in the UK. The P&L is almost pure merchant acquiring. Technical costs are recharged to Fiserv which processes the transactions and provides gateway, terminals and Clover ePOS. People, sales and marketing costs are recharged to the bank. 

Following four years of declines, total processed volume rose 10% in 2025 to £57bn but sits well below the £66bn recorded in 2021. Management points to wins in food, drink, entertainment, retail and travel. Total transactions were up 18% but there is a long way to go to recover Cardnet’s previous position. Recent wins in the travel sector, notably Ryanair, should certainly help. So should new partnership deals with PayPoint and EPOS Now. However, Lloyds Bank’s new tie-up with Stripe for small business products suggests that the Cardnet JV may increasingly focus on enterprise merchants.

Bar chart illustrating Lloyds Cardnet transaction volume in billion pounds for debit and credit from 2020 to 2025, alongside a line graph showing net fee income per transaction.

Cardnet splits out debit and credit processing. Debit has caused most of the pain in recent years. Despite growing 9% in 2025 to £41bn, debit volumes are well below the peak of £54bn in 2021. In contrast, credit has performed much better and reached a record level of £16.5bn in 2025. 

Average transaction value fell 6% to £54. This explains why 18% transaction growth only delivered 10% volume growth. 

Line graph showing average transaction value in pounds for Lloyds Cardnet from 2020 to 2025, with separate lines for credit and debit transactions.

Despite the higher processed volumes, net fee and commission income grew just 2% to £54m. Cardnet’s unit margins continue to be squeezed, possibly by the addition of volume from large enterprise clients. Net fee income per transaction fell 13% to 5.1p. 

Margins were boosted by much improved settlement-related interest income which doubled to £6m. The bottom line was also helped by much lower fraud provisions which fell from £3.5m to £1.7m.

Good cost control saw total expenses falling 10% to £36m. This includes £17.8m recharged to Lloyds for salary and related costs, down 3% on the previous year and £11.5m towards Cardnet’s “strategic investment programme.” Fiserv received £15.4m, roughly in line with previous years. 

Bar chart showing Lloyds Cardnet's net income and profit before tax in millions of pounds from 2020 to 2025.

Profit before tax was up 51% to £23.7m. Having missed a payment in 2024, the JV was able to pay a dividend of £31m to its parents.

Cardnet is winning again. Volumes and transactions have returned to growth and there have been significant merchant wins. But it’s earning less from that activity: a very healthy 18% increase in transactions yielded just 2% more net fee income. Yet, profits rose strongly in 2025 as interest income, lower costs and lower fraud losses compensated for weaker acquiring economics.

Cardnet grows revenue 5% despite loss of key clients

Geoffrey BarracloughLeave a comment

Cardnet, the JV between the Lloyds Bank of the UK and First Data, grew net revenue 5% to £60m in 2022 despite a fall of 10% in total payment volume to £59bn. The business was hit by the loss of two key clients processing £10bn between them. Underlying payment volume rose 6% 

Cardnet is a merchant acquiring joint venture between Lloyds Bank and First Data (Fiserv) with the bank holding 51%. Cardnet has no staff and is recharged for services provided by the parents. This means its financial accounts are not always directly comparable to more conventionally structured acquirers.

Lloyds provides sales and marketing through its business banking network. First Data is the processor and supplies card acceptance products including Clover. Cardnet also has relationships with 3rd parties including Liberis for Merchant Cash Advance and Qikserve for a mobile ordering app.

Overall debit volumes fell 18% to £44bn due to the loss of the two clients. These were financial institutions which processed £10bn annual volume between them at a very high average transaction value (ATV) of £476.. This transaction profile is typical of the sector, was most probably very low margin and would have contributed little to the bottom line. 

In contrast, higher-margin credit volumes, driven by a resurgence in the travel sector, grew 24% to £15bn. Airlines, hotels and cruises contributed an incremental £2.4bn volume at an ATV of £406 and more than made up for the loss of the financial institution clients.

The more favourable credit/debit mix combined most likely with price increases, drove net fee and commission income up 5% to £60m. This is a good performance in the context of the fall in volume processed. But neither Lloyds or First Data would be happy with revenue lagging UK inflation which was almost 12% for 2022 . Net take rate ticked up 1bp to 0.1% while net income per transaction was steady at 5.3p.

Despite the growth in net fee and commission income, higher costs hit profits. The increased number of transactions drove higher service fees from First Data, Cardnet was recharged an extra £3m staff salaries by its parents and the company spent £6m on its “Strategic Investment Programme.” As a result profit before tax fell 9% to £39m. Nevertheless, management felt confident enough to resume dividends with payments to the shareholders of £53m in 2022 and a further £35m after the financial year end.

Lloyds Cardnet recovers from Covid

Geoffrey BarracloughLeave a comment

Focused on Britain’s High Street heartland, Lloyds Cardnet suffered more than most during the Covid lockdowns. But as the nation got back to business during 2021, results have improved significantly. Management is pleased that trade has now “returned to normalised levels” although, looking forward, it warned that the cost-of-living crisis might be “negatively impacting on consumer discretionary spend in retail, travel and hospitality sectors.”

In the 2021 annual filings at Companies House, Cardnet reported a small recovery in payment volume but, with good cost control, this resulted in a much bigger uplift in profitability. 

Cardnet is a joint venture between Lloyds Bank and First Data (Fiserv) with the bank holding 51%. Lloyds provides sales and marketing through its business banking network. First Data runs the back office and supplies several products including Clover. Cardnet also has relationships with 3rd parties including Liberis for Merchant Cash Advance and Qikserve for a mobile ordering app.

Total payment volume rose 4% to £66bn on the back of significantly higher total transactions – up 13% to 1,062m. Increasing use of contactless for everyday transactions is the most likely factor driving down ATV  8% to £62.15.

Credit, although a small proportion of the total, outperformed. Volume was up 18%. Debit transaction count grew 12% but ATV was sharply lower.

Net revenue (reported by Cardnet as fees and commission income) rose 11% to £275m with the take rate ticking up 3bps to 0.42%. Profit before tax rebounded 48% to £43m giving a very healthy operating margin of 15.6%.  After two years with no dividend, Cardnet was able to pay out £39.5m after year end.