Digital Transactions Authoritative, insightful and timely information for payments professionals
U.S. Bancorp, owner of the big merchant processor Elavon, on Thursday reported merchant-acquiring volume of $142.6 billion in 2024’s fourth quarter, up 5% from $135.7 billion a year earlier. The company processed 2.11 billion merchant transactions in the quarter ending Dec. 31, a 5.5% increase from 2 billion a year earlier. But merchant revenue growth lagged and didn’t occur uniformly; revenues from what the bank calls its “tech-led” sector grew much faster than the rest of the portfolio.
Tech-led businesses, which generate 33% of U.S. Bank’s merchant revenue, include digital and e-commerce firms, omni-commerce, and integrated software providers, according to a presentation with the Minneapolis-based banking company’s fourth-quarter earnings report. Merchant-processing fee revenue from the tech-led sector grew 9% year-over-year in the fourth quarter versus 2.4% for total merchant fees, which were driven by non-travel sales growth, the bank said.
Global merchant-acquiring non-interest revenue came in at $421 million, up 2.9% year-over-year.
During a conference call to discuss the results, an analyst, noting that merchant revenue growth didn’t match volume growth, asked U.S. Bank’s top brass about an apparent 70-basis-point year-over-year decline in the yield from merchant acquiring. Chief financial officer John Stern replied that while same-store sales growth and margins in tech-led businesses were strong, “the growth on the other side of our client base has been in higher volume, lower margin, and that has persisted kind of throughout the year, and that’s kind of creating that disconnect that you just mentioned,” according to a Thomson-Reuters StreetEvents call transcript.
Company president Gunjan Kedia then said “we were disappointed in the merchant results for this quarter as well, but the business is really showing two very different characteristics. That’s the part that we are very proud of, which is the tech-led part, about a third of the business now,” according to the transcript. He noted that one source of growth is Salucro Healthcare Solutions LLC, an Elavon partner that provides patient payment and billing services. U.S. Bank acquired Salucro in August after initially investing in the company in 2022.
In October Elavon unveiled its Elavon Payment Gateway, a cloud-based service that includes integrations with digital wallets and capabilities including dynamic currency conversion, surcharging, recurring payments, and other features. Elavon is targeting the service initially at small and mid-sized business but plans to expand its availability to other segments this year.
Merchant processing is a major part of U.S. Bank’s Payments Services business, which generates about 25% of total revenue. The unit also includes credit and debit cards and corporate payments. This week U.S. Bank announced that it had hired Courtney Kelso as senior executive vice president and head of Payments: Consumer and Small Business effective Feb. 3. Kelso, a 17-year veteran of American Express Co., will be responsible for personal and small-business debit and credit cards, the Elan card business, cobranded cards, and related functions.
