Small Merchants Boost Vantiv as the Processor’s Merger With Worldpay Draws Closer

As its merger with London-based merchant acquirer Worldpay Group plc gets closer, payment processor Vantiv Inc. reported Thursday that it saw strong growth in its merchant-acquiring segment in the third quarter, especially from small and mid-sized merchants.

Symmes Township, Ohio-based Vantiv said net third-quarter revenues in its Merchant Services   segment increased 16% year-over-year to $468.8 million. Transactions grew 9% to 5.7 billion, and net revenue per transaction increased 6% to 8.2 cents.

Vantiv is best known for serving large merchants, but like many other acquirers has been pursuing more business of late from small and mid-size merchants because of their higher margins.

“Our merchant business continues to benefit from the expansion into small and medium-sized businesses,” Vantiv president and chief executive Charles Drucker said on a conference call with analysts. He called so-called SMBs a “high-growth channel which delivered another quarter of 20%-plus growth.”

To help boost its business with smaller merchants, Drucker noted that Vantiv last month launched FastAccess Funding, a settlement service that gets funds to merchants within minutes via Visa Inc.’s Visa Direct platform.

Vantiv’s other main business, processing for debit and credit card issuers, saw revenues decline 1% from a year earlier to $85.5 million as transactions plunged 18% to 848 million. The decline was the result of the big card issuer Capital One Financial Corp.’s move from Vantiv’s system.

Despite the loss of Capital One, net revenue per transaction in the Financial Institution Services segment grew 20% to 10 cents, and chief financial officer Stephanie Ferris said she expects revenue growth in the segment to resume in 2018’s second half.

In all, Vantiv reported net income of $106.9 million, up 23% from 2016’s third quarter, on net revenues of $554.2 million, up 13%.

Meanwhile, Ferris reported that Vantiv expects to get all necessary regulatory approvals for its planned $10 billion acquisition of Worldpay within its expected timelines. “We are on track to close during the first quarter of 2018,” she said.