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9
Operation and financial review
Overview
81
Worldline
2016 Registration Document
competitive, and the ability to deliver reliable, high quality
processing services at competitive prices for high
approach to achieve low costs and enhance its ability to
provide highly competitive pricing without sacrificing
processing volumes is an important differentiator. The
Group seeks to leverage its scale and global factory
reliability or profitability;
Pricing dynamics.
The payment services industry is highly
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services and Connected Living services that leverage the
“internet of things” are each creating new service
E-Ticketing and automated fare collection, new government
ecosystems with new non-cash payment needs.
is creating new digital businesses that are expected to drive
additional payment transaction growth in the coming years.
Emergence of new digital businesses.
The digital revolution
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Contract Structure
9.1.2.2
Although each contract is tailored to the circumstances and the
specific terms vary from client to client, the Group’s contracts
typically have one of two main structures:
Build to run contracts. The Group provides most of its
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paid to the Group upon completion of specified milestones
during the “build” phase of the service, as well as ongoing
services under mid- to long-term term “build to run”
contracts. These arrangements typically include fixed fees
typically include a fixed component, typically with a
pre-agreed capacity or assumed minimum number of
“run” fees paid once the service has become operational.
“Run” fees for operating and maintaining the system
transactions, and a variable component based on the
number of transactions beyond a pre-agreed threshold;
Transaction value based contracts. The Group provides
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some services under contracts that are primarily based on
processing of credit (or debit) card transactions in the
Group’s Commercial Acquiring business and some of the
the value of transactions processed, with minimal fees for
initial set up of the service. These arrangements include the
time of the transaction.
Group’s e-Ticketing contracts in Latin America. The Group
recognizes revenue from transaction based contracts at the
development stage of those contracts.
period is affected by the mix of types of contracts and the
The Group’s revenue and profitability recorded during any given
From a revenue perspective, the Group generally records a
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begins, the Group typically earns lower transaction based
revenue during the “ramp” phase of the project and higher
significant amount of revenue from a build to run contract
during the “build” phase. Once the “run” phase of a project
transaction based revenue once the project reaches the
“maturity” stage;
high) with relatively small additional cost. The “build” stage is
typically less profitable because the costs of building a
contract is typically the “maturity” stage, where the Group
earns increasing transaction based revenue (or they remain
contract with “run” revenue priced on a per transaction or
value basis may or may not be profitable, depending on the
service are usually higher than the fixed costs of running a
service once it is in place. During the “ramp” phase, a
terms of the agreement and whether the minimum fees
charged without reference to the number or value of
In terms of profitability, the most profitable stage of a
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transactions are high enough to offset the associated costs;
a project, differences in the mix of development stages of
the Group’s projects from period to period may cause
Given the front-end nature of build revenue and the lower
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associated profitability of the build and early ramp phases of
even more pronounced at the level of a particular global
business line or business division.
significant period to period fluctuations in revenue and
profitability at the consolidated level, and the effect may be
Revenue
Composition of Global Business Line
9.1.2.3
The Group’s consolidated revenue is generated by sales of
services and products by its three global business lines.
Revenue of theMerchant Services &Terminals
Global Business Line
The Group’s Merchant Services & Terminals global business line
generates revenue from four business lines:
performance of the Group’s merchant clients;
is affected primarily by average transaction values, the mix
of merchant types in its client portfolio and the commercial
generally consist of either a percentage of the value of the
transaction (in the case of credit card transactions) or a fixed
and debit card transactions. The fees the Group charges
at the time of the transaction. The Group also generates
revenue from ancillary value added services such as fraud
fee per transaction (in the case of debit cards), or both (in
the case of low-value debit transactions), and are recognized
Revenue from the Group’s Commercial Acquiring business
detection, customer feedback surveys, loyalty and gift card
solutions, DDC (dynamic currency conversion) services.
Commercial Acquiring.
The Group’s Commercial Acquiring
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revenue is primarily derived from the processing of credit