DEBUG: PAGE=domain, TITLE=NelsonHall Blog,ID=1469,TEMPLATE=blog
toggle expanded view
  • NelsonHall Blog

    We publish lots of information and analyst insights on our blogs. Here you can find the aggregated posts across all NelsonHall program blogs and much more.

  • Events & Webinars

    Keep up to date regarding some of the many upcoming events that NelsonHall participates in and also runs.

    Take the opportunity to join/attend in order to meet and discover live what makes NelsonHall a leading analyst firm in the industry.


Subscribe to blogs & alerts:

manage email alerts using the form below, in order to be notified via email whenever we publish new content:

Search research content:

Access our analyst expertise:

Only NelsonHall clients who are logged in have access to our analysts and advisors for their expert advice and opinion.

To find out more about how NelsonHall's analysts and sourcing advisors can assist you with your strategy and engagements, please contact our sales department here.

Not All Payments Vendors are Making the Grade: Contrasting Alliance Data and First Data

2013 was a very strong year for financial services BPO providers, especially transaction processors. However, not all vendors have fared well. Let's compare two card processing vendors headquartered in the U.S.: First Data and Alliance Data.

First Data: 

First Data announced Q4 2013 revenues were up 1% y/y to $2.8bn. Q4 2013 revenues (and y/y revenue growth) by activity were:

  • Retail and alliance services: $933m (0%)
  • Financial services: $354m (+2%)
  • International services: $454m (-2%)

Full year revenues were up 1% to $10.8bn, but the company made a loss of $869m.

Alliance Data: 

Alliance Data Q4 2013 revenues were up 17% y/y to $1,141m. Q4 2013 revenues (and y/y revenue growth) by activity were:

  • Loyalty Services: $245m (+13.0%)
  • Epsilon Marketing Services: $375m (+28.0%) 
  • Private Label Credit Services: $526m (+13.0%)

Full year 2013 revenues were up 19% to $4.3bn.

Comparing the two:

First Data has continued to perform poorly compared to peers. Despite strong industry conditions, First Data managed to lose close to $900m dollars, while barely growing its revenues (and actually shrinking its International revenues, in the fastest growing market overall). 

Based on this weak performance, First Data is likely to change senior management again (which has happened several times in as many years). First Data has not executed well for the past five years. It needs to start executing well, or competitors will build market share that will be difficult to overcome. We believe that the window for a turnaround at this point is only two years. 

In contrast, Alliance Data capped off a successful 2013 with a strong fourth quarter. At the bottom of the financial crisis Alliance Data focused on its areas of strength and for the past two years this strategy has paid off. The lines of business it has chosen to focus on (marketing, analytics, and private label card services, all with merchants) have a long ramp up ahead. Alliance Data should be able to continue this trend for at least five more years. 

No comments yet.

Post a comment to this article: