Tyro Payments has overcome the negative impact of the January outage that took a large number of merchants using its payment terminals offline for the best part of a week, reporting strong growth in merchant numbers and transaction values during the year to June.
Transaction values rose 27 per cent to A$25.5 billion during the year. Tyro estimates that its share of card payment acquiring rose from 3 per cent in 2019/20 to 3.8 per cent in the year to June.
Merchant numbers grew 81 per cent to 58,186, although this number includes 18,490 merchants that joined the network as part of Tyro taking over Bendigo and Adelaide Bank’s merchant acquiring business in June.
The company did take a financial hit as a result of the outage. It said 11 per cent of its merchant customers were partially affected and 19 per cent fully affected. It waived terminal rental fees and discounted merchant service fees worth $1.3 million, made a provision of $9 million for remediation and incurred $2.7 million of other costs.
It has settled 85 per cent of claims but is still calling for financially affected merchants to come forward.
Revenue for the year rose 13.2 per cent to $238.5 million, while operating expenses rose 7.6 per cent to $105.3 million.
Growth in revenue was significantly below growth in transaction values because of a shift in the payment mix away from credit cards and international cards to debit cards. Debit cards generate lower merchant service fees.
However, the change in the mix resulted in a higher margin. Debit cards have lower interchange and scheme fees. The company said: “The margin between the merchant service fee we charge merchants and the costs we pay to the card schemes and card issuers – our merchant acquiring fee margin – was 0.34 per cent of transaction value versus 0.32 per cent in 2019/20.”
The company reported EBITDA of $14.2 million – up from an EBITDA loss of $4.4 million in 2019/20. After accounting for depreciation and amortisation of $15.4 million, costs related to the outage of $13.3 million and other non-cash items, it made a loss of $29.8 million.
Net cash flow from operating activities rose from $8.2 million to $11 million.
In addition to its alliance with Bendigo and Adelaide bank, Tyro acquired Medipass Solutions in a $22.5 million deal that will give it a health payments business that links funders, healthcare practitioners and patients on a digital platform.
The banking side of the Tyro business had a mixed result. Loan originations fell 57 per cent to $25.8 million, largely as a result of the bank turning off its auto decisioning engine and using a manual approval process for merchant cash advances during the December half.
Interest income fell 53 per cent to $1.9 million. However, a $1.3 million release of the provision for expected credit loss helped boost the division’s profit from $1.3 million in 2019/20 to $2.8 million in the year to June.