Tyro Payments has cut staff numbers and increased merchant service fees in a bid to meet its goal of generating free cash flow by the end of the current financial year.
Merchant service fees as a proportion of transaction values rose from 80.8 basis points in the December half-year to 85.1 bps in the June 2022 quarter, and net merchant acquiring fees as a proportion of transaction values rose from 32.2 bps to 33.9 bps over the same period.
The company said it implemented the price increase in March, after not passing on scheme and interchange fee increases in the December half.
The company is taking a bit of a gamble. After suffering a system failure and prolonged outage early last year, Tyro had to compensate a significant number of its merchant customers. It has made A$5 million of remediation payments and has a provision of $3.9 million for further payments.
A fee increase could add insult to injury. But like other fintechs, Tyro is under pressure to find a “path to profitability”. It reported a loss $29.6 million for the year to June, following a loss of $29.8 million the previous year. It has not made a profit in the past five years.
Net cash outflow from operating activities, excluding loans and deposits, was $9 million, compared with outflow of $10.9 million in 2020/21.
Tyro has a payments partnership with Bendigo Bank, providing payments services to the bank’s customers. The $29.6 million loss includes $11.2 million of amortisation of the intangible asset recognised on completion of the Bendigo Alliance.
In addition it included a $4.7 expense for costs involved in moving Bendigo merchants to the Tyro platform.
The company’s preferred earnings measures are gross profit, up 24 per cent to $145.8 million, and EBITDA, which fell 24.7 per cent to $10.7 million
The transaction value processed by Tyro rose 34 per cent to $34.2 billion and merchant numbers grew 10 per cent to 63,770. The Bendigo Alliance accounted for $5.2 billion of transactions.
It is Australia’s fifth largest merchant acquirer by terminal numbers.
Tyro chief executive Robbie Cooke said transaction volumes were down in the December half, due to the impact of COVID lockdowns on retail sales, but picked up in the second half.
The banking division contributed revenue of $5.5 million to total revenue of $326.1 million. Loan originations rose 283 per cent to $99.1 million.
Cooke said a big focus for the company in the current year would be the development of its health business.
Tyro acquired “cardless digital healthcare claiming and payment platform” Medipass Solutions last year. Tyro has integrated Medipass into its existing health business and also integrated third party healthcare software so that it is able to support 13,000 healthcare providers.
In another development, it will roll out a new hand-held card reader, Tyro Go, aimed at microbusinesses and tradies.