Sterling weakness knocks c.$20m from US Bankcorp’s Q3 merchant acquiring revenues

Sterling’s continued weakness knocked about $20m from US Bancorp’s merchant acquiring revenues in Q3. The bank owns Elavon which is one of the larger cross-border acquirers in the European market with a strong position in travel and tourism.

Global merchant volume was up 9% to $136bn. Transaction count grew 12% and ATV fell 2% to $68.98.

Revenues would have grown at a similar rate to volumes but for the strong dollar and weak European currencies. Total merchant acquiring revenue, which has been growing a double digit levels, rose just 4% to $408m in Q3, about $20m lower than at constant currencies. The shortfall was “negatively impacted by unfavorable foreign currency exchange rates, given market volatility in Europe and specifically in the U.K.” according to Terry Dolan, CFO.

Take rate fell 2bps to 0.30%. 

Management believes there is significant untapped potential to cross-sell to its 1.1m business customers in the US. Only 30% of banking customers take payments products today while less than 50% of payments customers do their banking with USBC.

Like most other acquirers, USBC is building a “tech-enabled” distribution channel through partnerships with ISVs and gateways. It claims to have signed 2.5x as many partnerships in Q3 2022 as in the whole of 2019. Tech-enabled revenue outperformed and was up 7%. The company says Talech, an ECR software vendor acquired in 2019, is growing quickly but declined to give numbers other than new sales are running more than 5x 2019 levels.