Eye on Acquirers: Charge Volumes and Processing Revenues Grow for Vantiv and Heartland

Two leading merchant acquirers, Vantiv Inc. and Heartland Payment Systems Inc., are reporting strong transaction growth in their most recent financials.

Boosted in part by its first full year of owning Mercury Payment Systems, Symmes Township, Ohio-based Vantiv on Wednesday said its Merchant Services segment processed 19 billion transactions in 2015, up 17% from 16.3 billion in 2014. Vantiv completed its acquisition of Mercury, a leader in the so-called value-added reseller (VAR) niche, in the second quarter of 2014. In 2015’s fourth quarter, the transaction count rose 8% to 5.07 billion.

Net revenue per merchant transaction increased 5% in the fourth quarter to 7.16 cents from 6.79 cents a year earlier.

The merchant unit posted a fourth-quarter profit of $237.6 million, up 13% from 2014’s last quarter, on total revenues of $721.5 million, up 18%. For the full year, the segment reported a profit of $856.9 million, up 23% from 2014, on revenues of $2.66 billion, up 26%.

Vantiv’s Financial Institution Services segment, which provides card processing to issuers and debit card and other services, processed 1.01 billion transactions in the fourth quarter, up 4%, and 4.03 billion transactions in all of 2015, up 6%. The segment had a fourth-quarter profit of $83 million, an increase of 10% from a year earlier, on revenues of $130.8 million. Full-year revenues increased 5% to $503 million, with a segment profit of $320.9 million, up 4%.

“Our strong results in 2015 demonstrate how our strategy to invest in our core strengths while expanding into high-growth channels and verticals has successfully generated sustainable organic growth across our business,” Charles Drucker, Vantiv’s president and chief executive, said in a statement.

Vantiv recently found itself caught up in a dispute about the legal status of daily online fantasy sports Web sites, which some state officials say promote illegal gambling. Vantiv provides processing services for some of them, including two leaders—FanDuel and DraftKings. The New York Times reported Jan. 29 that Vantiv plans to exit the niche.

Meanwhile, Princeton, N.J.-based Heartland on Tuesday reported that its small and mid-sized merchant portfolio processed $24 billion in volume in the fourth quarter, up 14% from a year earlier. Total revenues grew 16% to $698.6 million, and net income totaled $22.7 million compared with a loss of $19.8 million in 2014’s fourth quarter.

For all of 2015, Heartland posted total revenues of $2.68 billion, up 16% from $2.31 billion in 2014, and net income of $84.7 million, a 150% increase from $33.9 million the prior year. With its pending merger with larger rival Global Payments Inc. expected to close by May 31, 2015 is likely to be Heartland’s last full year as an independent company.

Heartland said its payroll-processing unit, a segment where the company has made acquisitions in the past several years, saw net revenue increase 46%, including organic growth of 20% in the fourth quarter.