U.S. Bank expects revenues from its payments segment to continue to climb as it develops and deploys technology for small- and medium-sized businesses.
The $669 billion bank reported $1.1 billion in payments revenue in the second quarter, up 2.7% year over year, according to the company’s earnings report.
Merchant payments processing revenue accounted for 84.3% of total payments revenue, which has “seen very good core growth due to our tech lead initiative,” Chief Financial Officer John Stern said during today’s earnings call.
U.S. Bank’s payments-driven revenue was attributed in Q2 by the following:
- Card payment revenue of $428 million, up 2.7% YoY;
- Merchant processing payments of $452 million, up 4.1% YoY; and
- Corporate payment of $195 million, up 2.7% YoY.
THE BIG PICTURE: The Minneapolis-based bank is developing payments tech for small- and medium-sized businesses and aims to become a one-stop shop for banking-related activities for its business clients, Shruti Patel, chief product officer for business banking, previously told Bank Automation News.
“The industry is moving toward real-time payments, both on the consumer front and business front,” Patel said. “We know FedNow is investing in payments, TCH is all over the map, and think that there are certain products like money movement where we continue to invest in and modernize them which gives us a position of strength.”
The bank is also open to teaming up with fintechs and investing in them to improve its offerings and reduce time to market, she said.
U.S. Bank teamed up with debit fintech Greenlight Financial Technology last month to help parents teach financial literacy to their children, Brandon Horne, general manager of partnerships at Greenlight, told BAN.
BY THE NUMBERS: In Q2, U.S. Bank reported:
- Net revenue of $6.9 billion, down 4.3% YoY;
- Technology and communications spend of $509 million, down 2.4% YoY;
- Net interest income of $4.1 billion, down 8.9% YoY; and
- Efficiency ratio of 61%, compared to 63.7% a year ago.
MARKET REACTION: U.S. Bank’s shares were trading at $45.26, up 4.5% on Wednesday at 1:20 p.m. ET.
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