To the Pfizer of 2021 First Quarter Earnings Conference Call. All participants will be in a listen only mode until the question and answer session begins following the presentation. As a reminder, today's call is being recorded. At this time, I will turn the call over to Shub Mukherjee, Senior Vice President of Investor Relations at Fiserv.
Thank you, and good morning. With me on the call today are Frank Nuzzignano, our President and Chief Executive Officer and Bob Howe, our Chief Financial Officer. Our earnings release and supplemental materials for the quarter are available on the Investor Relations section of fiserv.com. Our remarks today will include forward looking statements About, among other matters, the impact of the COVID-nineteen pandemic on our business, expected operating and financial results, Strategic initiatives and expected benefits and synergies from the First Data acquisition. Forward looking statements may differ materially from actual results and are subject to a number of risks and uncertainties.
You should refer to our earnings release for a discussion of these risk factors. Please refer to our earnings release and supplemental material for today's Call for an explanation of the non GAAP financial measures discussed in this call, along with a reconciliation of those measures To the nearest applicable GAAP measures, unless otherwise stated, performance references are year over year comparisons And all references to internal revenue growth are on a constant currency basis. And now, I'll turn the call over to Frank.
Thank you, Shu. Great to have you on the team. Q2021 is off to a strong start. With Q1 at or better than our expectations across a broad range of metrics. The strength of our results reflects investment in technology, innovation, our client portfolio and our people through the COVID-nineteen pandemic.
Let me provide a brief overview of our strong financial results in the quarter. You may have noticed that our Q1 earnings presentation Has been updated. If you're following along, I will provide some overview comments captured on the first three pages And then Bob will provide more detail on the subsequent slides. Total company internal revenue growth was 4% for the quarter, including low double digit growth in March. That performance was led by our Merchant Acceptance segment, Which was up 8%, an exceptional result in light of the global pandemic and continued COVID restrictions, Particularly in Brazil, India and a variety of countries in EMEA for much of the quarter.
Adjusted operating margin grew 360 basis points, resulting in an 18% increase In adjusted earnings per share, free cash flow grew 8% to 821,000,000 103% conversion to adjusted net income. Our sales momentum remains quite strong As first quarter sales were up 42%, with strong results in our payments and international businesses. And this momentum continues into the Q2. Yesterday, we announced Cascia is one of Brazil's largest banks with more than 26,000 sales outlets And a broad presence throughout all of Brazil, making this one of the largest wins for our company in Latin America And one of the largest globally. Also this morning, we announced a new solution with PayPal To enable our merchant network across the Clover and Karat platforms to accept payments via PayPal And Venmo through QR codes presented at the point of sale.
We believe this is an important offering for our merchants As consumer preferences continue to shift towards touch free transactions, the combination of robust sales An excellent pipeline is evidence that our formula of bringing the strength and breadth of Fiserv's offerings Together with our integrated sales model is extremely well received in the client's office And we believe bodes well for the future. Now I'd like to update you on how our leading digital Abel's merchant business is performing. Drew Clover, a leading SMB platform, Carrot, Our enterprise omni channel commerce solution and Clover Connect, our rich ISV solution set, We continue to drive innovation, expand partnerships and deliver leading solutions to our merchant clients. The momentum within the digital enabled segments of the merchant business continues to be excellent. Clover's gross payment volume grew 36% year over year to $141,000,000,000 annualized.
To provide some more context around the strength of the Clover platform, GBV has grown 75% From $81,000,000,000 in Q1 to $141,000,000,000 in Q1 this year. Despite the economic headwind from the pandemic, Tarett, our enterprise omni channel solution continued to perform very well. E commerce transactions grew 24% compared to the prior year. Omni channel transactions such as order ahead And pickup in store were up over 122% year over year. We won A record 51 new enterprise level e commerce clients in the Q1, including Cost Plus World Market, a U.
S. Specialty retailer for which Vizor has been chosen to provide e commerce gateway, point of sale hardware devices and value added services like security tokenization. We had a very strong result for sales internationally. The notable wins in EMEA include Selecta, Europe's leading self-service retailer, offering coffee and convenience food solutions through which Vicer has been chosen To provide acquiring services in unattended POS hardware. And with Ham, we ended our relationship We're one of the largest e commerce marketplaces in the region.
In APAC, we won the merchant acquiring business for Australia's 2nd largest bill payment provider. We also expanded our relationship with key brands such as State Farm, Where we are piloting a new digital payout experience for insurance claims. Recognizing our innovation To bring digital payments to all consumers, Fiserv was named one of the world's most innovative companies By Fast Company, for our role in enabling the acceptance of U. S. Department of Agriculture's SNAP Online EBT payments during the pandemic.
We continue to see great momentum in the ISV With Clover Connect. In the Q1, we signed 42 new ISV partners. Our continued strength in expanding partner relationships is driving strong results in active merchants, Which were up 38% in Q1 and ISV channel revenue growth, which was up 34%. For example, during the quarter Fiserv further cemented its lead in the mortgage servicing software vertical by signing a Strategic partnership agreement with Mortgage Cadence, an Accenture Company, which provides loan origination software for the mortgage industry. This is yet another example of a successful integrated sale continuing to fuel future growth in our ISV Additionally, we are continuing to build and enhance our existing ISV relationships By leveraging our technology and market knowledge, in the quarter, we finalized an agreement With Detailed Pet to move their large set of existing merchants to us and build upon the agreement we had in place for new merchants.
Moving to our account processing business, we continue to expand our number of privilege relationships Across financial institutions of all sizes and types. We signed 10 new core account processing clients in the quarter, Including 5 on the DNA platform. I'd like to highlight a few of our recent wins. As we mentioned on our last earnings call, We signed Republic First Bank, a commercial bank with more than $5,000,000,000 in assets and rated America's Best Bank by Forbes for a full service of Fiserv products, including core processing, Card Services and Output Solutions in February. Additionally, we signed 2 de novo banks in the quarter, Including Genesis Bank, a newly chartered bank focused as a minority depository institution.
This win Continues to show our commitment to supporting minority communities. A majority of these illustrative wins We're competitive takeaways with a common characteristic. The client selected a leading core platform Plus, multiple surround digital solutions to support their goals of sustained growth and superior customer service. These wins also reflect the strength of our offering for a wide range of clients from de novo banks To large financial institutions. In our Payment and Network segment, We continue to leverage the power of our combined solutions to drive revenue synergies.
In Q1, We signed a significant new agreement to provide statement and letter services to a major U. S. Healthcare services provider, Strengthening our position in this industry vertical. Further building on our digital momentum, in Q1, we signed agreements To provide digital solutions to First Horizon Bank as well as PenFed Credit Union. In both cases, Leveraging our newly acquired On Dot capabilities.
Through On Dot, we can enable our FI clients To offer their cardholders personalized real time digital experiences, driving cardholder engagement and spend. We expect continued adoption of these digital solutions across our client base. With that, let me update you on our integration efforts. Through Q1, we've already nearly $1,100,000,000 of cost savings and are well on our way to fully action our $1,200,000,000 cost Our next objective by the end of this year. With the majority of the integration work behind us, We are focused on driving further growth and sustainable value in the years ahead.
On the revenue side, we're pleased with the level of synergy sales, which accelerated in the 1st quarter. As of the end of Q1, we've already actioned $265,000,000 in annual revenue synergies And our synergy sales pipeline is growing robustly and we expect to meet or exceed our $600,000,000 target Over the 5 years post merger. Our bank merchant program continues to be a synergy opportunity And offers financial institutions of all sizes the ability to offer their important merchant clients A modern suite of merchant acquiring capabilities, including the innovative Clover platform along with digital capabilities like Loyalty programs and e commerce solutions. In the Q1, we added 34 new bank merchant clients, 6 with assets over $1,000,000,000 Additionally, half of these wins were competitive takeaways. The pipeline remains robust for the rest of 2021.
One final point On our digital initiatives before turning it over to Bob. As you've heard us discuss in the past, one of the most important Strategic initiatives is to redefine the client experience by utilizing the latest technology to drive innovation And offer digital capabilities across our payments ecosystem. An example of our commitment To this area is the acquisition of ONDOT Systems, a leading digital experience platform provider for financial institutions of all sizes, We've closed in the Q1. We also acquired Radius 8, a cloud based platform that adds hyper localized Commerce capabilities to carry, thereby enhancing AL beyond the buy button strategy. Last but not least, we announced the definitive agreement to acquire Pineapple Payments, a leading ISO focused on integrated payments.
Now let me pass the discussion to Bob for more detail on our financial results.
Thank you, Frank, and good morning, everyone. If you're following along on our new slides, I'll cover some detail on each of our segments. We had a strong Q1 in light of continued pressure from the pandemic across the globe. Q1 represents the final period of pre pandemic comparison points with the impact beginning to materialize in the final 2 weeks of March last year. Total company internal revenue growth was 4% in the quarter, led by the Merchant Acceptance segment, which grew 8%.
1st quarter adjusted operating income was up a strong 15% to $1,100,000,000 and adjusted operating margin increased by a very strong 360 basis points to 31.4%. This margin improvement was driven by our rigorous cost synergy execution, which produced $129,000,000 of incremental cost synergies in the quarter as well as strong operating performance. 1st quarter adjusted earnings per share increased 18% to $1.17 compared to $0.99 in the prior year. Free cash flow in the quarter was $821,000,000 up 8% Over Q1 last year and a 103% conversion to adjusted net income. Impacting Q1's free cash flow was an increase in accounts receivable driven by a strong revenue rebound in March.
Turning to each of the segments. Internal revenue growth in the Merchant Acceptance segment was 8% in the quarter. Our results were once again driven by Strong performances in our portfolio of SMB clients supported by our Clover platform, enterprise clients supported by Carrot And another strong quarter from our ISV business. This result includes a meaningful headwind from our EMEA region, which Experience restrictions for much of the quarter in several important markets for us, including the UK, Germany, Ireland and Poland. As Frank discussed, our Clover GPV continues to grow very nicely, up 36% in the quarter.
The outlook for the SMB business looks wrong as the sequential uplift that we witnessed in this business in the last few weeks of March has continued through April. Our integrated payments or ISV business continues to perform extremely well with continued strong revenue growth in the quarter. As we discussed at our Investor Day, we recently rolled out Clover Connect, a Clover integrated solution for ISVs. We believe that this solution will further extend our differentiation for ISVs and their merchant customers And continue to drive excellent growth in the future. Adjusted operating income in the Acceptance segment increased 37% To $387,000,000 in the quarter and adjusted operating margin was up 6.50 basis points to 27.7 percent driven by the strength in the top line and continued cost synergies.
The FinTech segment internal revenue grew 2% in the 1st quarter Compared to the prior year, as growth in high quality recurring revenue was again partially offset by lower periodic revenue, most prominently termination fees, Which created approximately 150 basis points of headwind to internal revenue growth in the quarter. The shift towards digital banking and the result in Strong demand for our broader way of digital solutions continues. For example, total mobile subscribers across our leading digital platforms, Mobility and Architect grew 12% in the quarter. Mobile deposits in Q1 grew 30% over the prior year, While self-service ATM deposits grew 65% over last year. We expect these trends to continue as users who have moved to mobile or ATM for check deposits may adopt these as preferred channels after experiencing their convenience and safety.
Adjusted operating income was up a strong 21% in the quarter to $246,000,000 Adjusted operating margin in the segment Increased a robust 510 basis points in the quarter to 33.4 percent on a combination of growth in processing revenue, Operational effectiveness benefits and cost synergies. The Payments and Networks segment saw internal revenue growth 2% in the 1st quarter As growth in our card services, output solutions, Zelle and prepaid businesses, including the benefit from revenue synergies Was partially offset by headwinds in our bill pay and credit businesses. Debit transactions grew a strong 16% year over year, Slightly ahead of levels last quarter. We continue to see excellent transaction growth in solutions such as our account to account transfers and P2P. Both Zelle transactions and the number of clients live on Zelle more than doubled in the quarter versus a year ago.
Our bill pay and credit businesses in particular given our retail private label mix saw headwinds from the pandemic that we Expect to subside as we reach the second half of the year with better economic activity and better revenue comparisons. Adjusted operating income for the segment was up 2% to $585,000,000 and adjusted operating margin was up 20 basis points to 41.4 percent in the quarter. The results were driven by positive impact of both revenue and cost synergies in part offset by the lower revenue in our higher margin credit processing and bill pay businesses. The adjusted corporate operating loss was $102,000,000 in the quarter, in line with our expectations. The adjusted effective tax rate in the quarter was 17.2%, flat versus prior year.
We also expect Our full year adjusted effective tax rate to be fairly consistent with the 2020 rate in the range of 21% to 22%. During the quarter, we continued our disciplined capital allocation strategy by repurchasing 5,200,000 shares for $612,000,000 And we have more than 60,000,000 shares remaining authorized for repurchase. In addition, as Frank mentioned earlier, We completed the acquisition of Andot Systems in January and increased our investment related to the TEGRA 1 100 and 18, our former investment services business in connection with this combination with WealthTech Holdings. Total debt outstanding was $21,200,000,000 at March 31st And the debt to adjusted EBITDA ratio remained at 3.6 times. We are on track to achieve our targeted leverage of less than 3 times in the second half 2021 as we anticipate both strong adjusted EBITDA growth and debt repayment this year.
As you heard us emphasize throughout our Investor Day in December, we're fully committed to our long standing capital allocation strategy, which includes maintaining a strong balance sheet, making organic investment in innovative solutions and pursuing high value acquisitions like On Dot, Radius8 And pineapple payments. Importantly, share repurchase remains our benchmark for capital deployment. With that, let me turn the call back to Frank.
Thanks, Bob. Given our strong Q1 performance and an improved economic outlook, We are raising the low end of our outlook range for both internal revenue and adjusted EPS growth. We now expect 2021 internal revenue growth to be in the 9% To be in the $5.35 to 5.50 Which is a 21% to 24% growth over last year. This is up $0.05 at the bottom end From our prior outlook, we continue to expect adjusted operating margin to by at least 250 basis points and free cash flow conversion to be greater 108% for the year. The improved range for internal revenue and adjusted EPS growth outlook are grounded in our performance today, the current state of the economy and our internal assumptions about the trajectory of economic recovery, both of which have improved versus February when we provided our prior outlook.
To remind you, the low end of our original outlook in February assumed no material Economic recovery from where we were at that time. Similarly, the 9% at the low end of Alex's Updated outlook assumes the same, no material economic recovery for the remainder of the year. Regionally, we are seeing good economic progress in the U. S. Driven both by government stimulus As well as COVID vaccine distribution with uneven recovery outside the U.
S. As more pronounced COVID impacts persisted in parts of EMEA, LatAm and APAC. As we indicated during our last earnings call, given the timing of the pandemic impact last year, We expect Q1 performance to be below our full year outlook range, and it was. We expect Q2 growth rates will be above the full year outlook range, driven by Our business momentum and an easier year ago comparison. I'm proud of the results we've delivered as we navigate the Our business has shown incredible strength and resilience, Leading to what we expect to be our 36th consecutive year of double digit In addition to delivering on our financial results, we continue to focus on our community.
During the quarter, We successfully completed a back to business grant program in the original six locations that were selected in 2020. We also held 2 additional programs in Milwaukee, partnering with the Milwaukee Bucks to celebrate Black History Month And in March, the second event, partnering with the Bucks and Nancy Lieberman during Women's History Month To award additional grants to minority women owned small businesses. Last, Let me thank our more than 40,000 talented associates around the world for their commitment and courage As we stand together to deliver value for clients, our colleagues and for you, our shareholders. With that, Operator, let's open the line for questions.
Thank you. We would now like to open the phone lines for questions. Our first question comes from Dave Koning from Baird. Your line is open.
Yes. Hey, guys. Great job.
Thanks, David. Thank you.
Yes. Thanks. So I guess, first of all, just On the Acceptance segment, really nice momentum there. Maybe could you kind of walk through how January February trends were and then how kind of March April trends were just to kind of understand how the months worked as things kind of progressed?
Yes, I'd take it at the macro level. January February obviously Begin a little movement up in volume, but really not very much. If you remember in February, we talked to you all and gave a little look at what we saw up until then. And that's when we took Really that bottom end up from for the flow firm up from 7 to 8 because we It felt better than it did when we talked to you on December 8th at Investor Day. We did see A strong March, we saw a weaker February in the U.
S. I'd credit a fair amount of that to weather that you saw going on. We saw a stronger March. But I think on top of that, We saw more lockdowns in EMEA. And Brazil, as I had talked Talked about previously, although hampered tremendously by COVID, still had Spending going on.
And I see as we come into April and as we're kind of ahead to the end of We see the progression in the U. S. Obviously, India is a challenged environment In total, right now, EMEA is beginning to open up and Brazil continues to perform And why we take the bottom up from 8 to 9 there, if that's helpful to you.
Yes. Thank you. And I guess another way kind of to think through this as we look really into Q2, I look back at the last 5 years of First Data, The GBS segment in, very routinely, it was up about 10% sequentially in Q2, very close to the same every year. And margins were up like the incremental margins were nearly 100%. So it's like a 300 basis points, 400 basis points, 500 basis points sequential jump in margins.
Is there anything different about that seasonality? It would almost seem like the seasonality would be even better this Q2 than some of those past trends, but just Trying to triangulate that.
Yes. I think you're thinking about it, right? I mean, look, As January versus last January was Definitely, definitely a bad compare. I would consider Q2 and why we talk about it As being outside the top end of the range is because it's against a weak comp. So I would Expect that seasonality to perform better than you would have ever seen.
Dave, recall during our earnings call last quarter, 90 days ago, When we talked about the cadence of our revenue growth, we expected Q1 to be below The full year guidance range given the comps against pre pandemic period really all of January, February and half of March, Then Q2 would actually be above the full year guidance range with the second half of the year more in line with that overall full year. We do expect sequentially to continue to see seasonality benefit Q1 to Q2 in the Merchant segment. We'll also see the benefit of Pandemic continuing to subside, particularly in the U. S. As more and more people get inoculated and hopefully improvement in EMEA as some of the lockdowns begin To be relaxed.
Yes, great. Thanks guys. Nice
job. Good to talk to you in the morning too, Dave.
Thanks.
Thank you. Our next question comes from Darrin Peller from Wolfe Research. Your line is open.
Hey guys, great job. Thanks. I want to just hone in on looking at the outperformance in the merchant side going back. Frank, if you look at what you guys outperformed on, there's a lot Was it mix or was it the technology? You showed some really good data points on clover and carotenized fees.
And now when thinking about coming on the other side of this Pandemic, first of all, if you can comment on that point that it's probably a good combination of mix and technology, what was the areas that really stood out technologically? What are the areas that you now see on the other side of the pandemic that are doing more than you would have thought pre pandemic and could drive even better growth to that 9% to 12% merchant range You've talked about.
Yes. I think first, you had to think about corporate growth, Very, very strong. E comm wins and that the backlog that's on boarding continues to be very, very strong. Our ISV business performing well. I mean, lockdowns in EMEA definitely affect us and I would We can feel that in the UK opening up.
Our client mix, We've been bullish on the whole way, but I've also been very clear that we Have a huge diverse client base from SMBs to large enterprises and across Every industry sector as well as a large presence in geographies. And so I think when you look at outlook oil, we still have Lagging verticals, restaurants, travel and services. So we have an expectation In the later Q2 and the Q3, that's always recover well. We've invested heavily in Clover, We continue to do it heavily in Carrot, continue to do it and heavily in Clover Connect. So I look forward to us being able to continue the type of momentum we have for a long time.
Okay.
All right. So all of
those areas are really going to be a bigger percentage of the mix, something out of this than they were before, I guess, right?
Say that again, Darren.
So whether it's Clover or Carrot or ISVs, the mix contribution, the revenue contribution from those areas probably will be a notably bigger percent of revenue coming out of the pandemic Than they were before, I would say. And I don't know if you can give any update on data points around that, but the Investor Day started us off with some good ones. Is that fair?
Yes. Darren, I think there's a couple of things that will play. Number 1, as Frank pointed out, while we have Strength of diversity of geography and client base, meaning we serve the largest Retailers in the world all the way down to the smallest SMBs, the breadth has served us well, but we also of course have Pretty meaningful exposure to restaurants and retail that have still a lot of recovery ahead of them that will help us with growth going forward. We think we've Outperformed the market the last 4, 6, 8 quarters quite frankly, and we have the opportunity to continue to do that. The other dynamic courses as Clover and ISV and e comm, which are growing faster than the overall average become a larger You'll see better growth from those becoming a more meaningful piece of the overall company.
As we pointed out, $1,000,000,000 ecom business continuing to grow nicely. It becomes a bigger part of that $6,000,000,000 segment and providing some nice growth.
All
right. Just very quickly repurchasing shares, I think you did 5 a little over 5,000,000 shares. Again, that's a key area that we focus on for you guys, especially given good free cash conversion. So, just can you update us on your appetite and your capacity for the rest of this year? And thanks again, guys.
Yes, sure. We feel great about the position that we're in, good cash generation in the Q1. I mentioned in my prepared remarks a little bit of accounts receivable growth driven this given the strong March, Which of course will generate cash in the Q2 as we collect those receivables, 103% conversion in the first quarter, Well on track to do the $108,000,000 for the full year. So we feel like, A, we've got continued good strong free cash flow generation, Gives us the capacity to buy back shares. And of course, as you heard us lay out in our earnings, excuse me, in our Investor Day, Back in December, dollars 30,000,000,000 of capital to deploy over the 5 years.
We did a meaningful buyback in the Q1 and we see the opportunity to do that for the balance of the year.
Great. Thanks again, guys.
Thank you. Our next question comes from Lisa Ellis from MoffettNathanson. Your line is open.
Good morning, guys. I had a specific question on the use of the digital sales channels for Clover. If I recall, prior To the merger with Fiserv, this was an area First Data had invested really heavily in, in building online sales And also a merchant could apply, get approved instantly by their clovers, directly. And I realized we hadn't heard a lot about this, too much In the last year or 2. So I was just wondering, at the time, that was a major differentiator for your platform compared to your large Competitors, could you just update us on how widely this channel has been deployed and how significant of a factor it is in clover sales?
Thank you.
I'd say, 1st of all, we continue to veer in there. And when you hear us talk about The addition of new bank programs, we view every one of those as us ultimately driving digital adoption, Right. We always believe that partners were great places for digital adoption. As we believe Clover itself was a great place When you look at the totality of our business globally, I would still put it in the not meaningful in total category, But a channel which continues to accelerate its growth and one that We believe we will deliver more integrated opportunities for digital sign up. And when you think about the things we will do longer term with our bank partners having a one of a kind digital experience For that bank merchant partner, while continuing to work with Paychex and the Verizons also And using our direct channel to digitally sign up.
So I think it will be part of the 5 year journey we talk about. It's Not the overwhelming part of our sign up machine, but our capability is huge and our ability To attract new partners because of that digital capability and sign up merchants is, been contributing to the growth rate.
Okay. And then my follow-up, another one related to go to market or distribution on the merchant side. Just a question on your strategy with e commerce platforms, and I'm thinking specifically about Businesses that aggregate SMBs in a particular industry like restaurant aggregators or retail aggregators of a particular type, With everything you're doing with Clover, with Carrot, with Clover Connect, with the recent acquisitions, how are you serving these types Of customers or how are you how do they sort of fit into your strategy and merchant? Thank you.
Well, I
think it fits completely in our strategy. We've always You view us as a partner of choice, a great distributor. We operate in basically Every vertical and every capability and you hear us today talk about extending a relationship in Brazil and Latin America With one of the largest e com players, that's really an example of us our commitment to marketplace And you'll see that happen internally on new open coming marketplaces, us being And a boarder and a distributor for them too. So I think we have a deep commitment there. I think our capabilities are And you hear it in the things we say today in our announcement.
Terrific. Thank you. Good stuff.
Thank you. Our next question comes from Dan Dolev from Mizuho. Your line is open.
Hey, thank you. Amazing results, very impressive. Great job, Frank and team.
Thanks, Dan. Thank you, Dan.
So I almost refuse to accept the explanation that it's just a macro improvement. I mean, I think there's significant share gains That you guys are getting out there and that's what we are hearing from the channel in merchant acquiring. Can you maybe Give us a little bit of an understanding of who you're taking share from, who you're displacing, what are you seeing out there, how are you winning and who are you winning against? Thank you.
Well, if you think about it's It's a global business we're in. So you saw us announce a large deal in Brazil And we've been we started that Brazilian business back 2014, 2015, and we've been taking share Beyond where anybody thought was capable in that market itself. So I point to that because We weren't a big ISV player back in 2015 2016 or probably 2017 Until we bought CardConnect and BluePay, but then we fit this together with Clover and began that journey and we see that You well know how probably people thought we're an ecom wagger and we continue So when in that space, now in some of these cases, it's new markets, but in many cases, It's taking it from all the places you would suspect. And I would look at us saying, hey, If you go through the hundreds of bank merchant wins we have talked Fundamentally, those are 50% takeaways. So We continue to compete against everybody very strongly and that's in every market and in every vertical.
And it gets back to what we had said on Investor Day when you look at this portfolio with Clover with Clover Connect with Carrot, with global distribution, with the client base that we have from Largest in the world, the corner, as I like to say at the corner store. I think We built a business that's the most diverse and probably has the most technology in all honesty.
Thank you. And then quick follow-up. If I think about that 8% growth in merchant, would you and I'm sorry if I missed Can you give us maybe the cadence like January, February, March and what it's looking like in April, specifically on that 8% in merchant? Is there any way to parse it out a little bit?
Yes. Dan, I think there's a couple of things. If you look at the year over year growth rate, Obviously, given the pre pandemic comparison in January February and then March half the quarter was pre pandemic, the other half to me half the month, the other half of the month was a pretty severe Shutdown is particularly in the U. S, but also in Europe, people really significantly went home And Commerce really took a hit in second half of March last year. So you see the year over year comp Get significantly better in those last 2 weeks.
If you just look at kind of the raw transactions, January started out The year, the quarter, strong. February, as Frank mentioned, we saw some weather, particularly in the South in the U. S. Slow things down a bit and then March came back quite a bit stronger. If you can adjust for weather, I would say January started out nice.
February, again, adjusted for weather was again in line or good with January. And then we Started seeing things really pick up in March. I'm sure not coincidentally and help supported by the stim 3 payments that Started flowing out and we've seen that continue into April. So we're definitely feeling the Recovery of the pandemic as vaccines really spread in the U. S, we're seeing more and more commerce retail picking up, Restaurants starting to pick up still down year over year in a meaningful way, but starting to improve sequentially pretty nicely.
Thank you. I appreciate it.
Thank you. Our next question comes from Andrew Jeffrey from Truist Securities. Your line is open.
Hi. Pardon me. Good morning. Appreciate you taking the question. Lots of helpful inputs and commentary In the acceptance business, can you talk a little bit about churn?
And I'm just trying to get a sense of How that might improve or what the dynamic looks like as we reopen in terms of what's coming in the top of the funnel be that Clover, SMB, Enterprise and Converse is what's coming out of the bottom of the funnel and how we think about that sort of all translating into sustainable internal revenue growth in your Acceptance business?
Yes. Well, a pandemic gets a lot of people to shut I think we're going to see the strongest small business formation in the second half that we've ever seen. And that's why these channels we have are so darn valuable. Our commitment To the small businesses, you probably saw us even as a technical provider, one of A few to the SBA for the restaurant brand. So I think we've done a good job over the long haul of Our clients and I think our Clover platform, our ISV platform, our Cary platform, all are well received by our And I look for strength in small business formation, even for those who shut down to Come back in a different shape and form.
So I guess, churn seems very good for us if
you want to think about attrition.
I mean, we feel strong about the job we're doing. And of course, any client leaving upsets us at any level. But I think the other part you got to put on top of it is the tremendously strong small business formation and why all these channels we have, we believe, They're so darn valuable for us in that process.
Okay. It's helpful. Thank you. And a quick follow-up on payments. Again, really nice KPIs, whether it's Zelle or debit transaction growth.
And I realize there are some pandemic headwinds perhaps in credit. Can you offer some insight as to when some of those digital solutions P2P, I'm thinking in particular really start to move the needle from a top line perspective in that business?
Yes, Andrew. As you point out, we saw some very nice KPIs Support in the overall payments business, Zelle with both the number of transactions and number of users, doubling certainly supports Debit processing as well as the debit network performing quite well. We continue to Love the acquisition of Andot and our ability to provide additional digital services for card controls and card activation To our overall channel, we see that as a significant growth opportunity, not only to obviously provide that Particular capability, but that is an overall part of our solution. We certainly have the benefit of Some of the significant wins in the credit issuing business that we talked about over the last couple of quarters Beginning to ramp late 2021 into 2022, the 2% growth in The payment segment in the Q1 here is not an indication of where we see the opportunity for the full year. There's some definite Headwinds there from the pandemic that we expect to subside.
And I think we said this at the end of last earnings call, but I still believe it today. We expect the payments segment for the full year to be at the upper end of the medium term Outlook for internal revenue growth. So we believe 2022, 2023 that payment segment can grow 5% to 8% And we think this year will be at the upper end of that as we head into the second half of the year and we see the full year result. So we think we're in a great spot. We'll see some continued growth, particularly in our digital side of the payments, And we'll see improvement in that bill pay and credit issuing, particularly at the retail private label in the second half.
Thank you.
Thank you. Our next question comes from Tien Tsin Huang from JPMorgan. Your line is open.
Hi, good morning. Really appreciate the new slide format is real good. Just looking at the acceptance slide here, the 8% Internal revenue growth on 13% global volume growth. Do you see potential for that spread between revenue and volume growth to narrow Or even flip in the second quarter or the second half of the year? I'm asking because based on what Frank said around new businesses reforming and hopefully more in store Behavior that should help you I think on the spread.
So I just wanted to check that.
Yes. I think that's
the right way to think about it. There's certainly opportunity going forward and we'll see obviously how the economy Rebounds into the second half of the year. All indications right now are quite strong. It's why we lifted The bottom end of our guidance range, now twice in a row from 7% back in December to 8% in last quarter and now 9%. We see the economy improving and that helps overall merchant acceptance.
It helps the overall company, but merchant acceptance and that spread also.
Okay. That's great. Then just a quick follow-up. I wanted to ask about Star and your penless debit Initiatives and investments, in light of I think Visa did disclose that DOJ is looking into some of their debit practices. I thought it was Good time to check-in with you on what's happening with the Penlist debit.
Yes.
I mean, Star and Exel are standout performers for us And our investment in that business continues to be large. I think you'll continue to see us Invest, work hard on painless debit and other aspects around Signature too as we had That's a long haul. It's a short haul. It's a lot of infrastructure work, but we're investing heavily in the network and We have a deep belief in the growth in network and the power of the network, especially in this company where we have a network business and we They have merchants and it is good for financial institutions, STAR and XL together and good ground merchants. So Long journey, but that will continue to be something that we'll talk to you about and we're committed to and show is part of the star Our performing businesses in the company, no pun intended.
Got it. Thanks for the update.
Thanks, Jin Chen.
Thank you. Our next question comes from David Togut from Evercore ISI. Your line is open.
Thank you. Good morning. Looking at the acceleration And Clover TPV growth from 25% in Q4 to 36% in Q1. Can you drill down a little bit Into the drivers there, for example, how much would have been from onboarding new clients versus an improvement in same store sales? Just trying to understand the sustainability of this higher growth rate for Clover.
Yes. I think the way to think about it is number 1, we do think the growth rate of Clover is quite sustainable. We've seen very strong growth, the last several years, 25%, 30%, 35%, 40% in a given quarter. I think you saw in Q4, really the second half of last year, Some slowing driven the pandemic obviously, as we anniversary that and continue to See, as Frank pointed out, new business formation, that certainly, is a beneficiary to Clover, given The depth of our channel capability and our distribution system, we think we can benefit very nicely from that new business formation. So I would expect that Clover revenue to me that GPV growth to continue for some time going forward.
And we continue to invest in capability there And continue to enhance our solution set.
Understood. Just as a follow-up, looking at the 2% organic revenue growth in the FinTech segment in Q1, can you call out the headwind that you saw from declining periodic revenue, so we can gauge the underlying internal growth Going forward.
Yes. For Q1, that periodic headwind, which again was largely driven by termination fees, Was about 150 basis points. Said another way, outside of that, we would have grown about 3 50 bps. We do expect the headwind to continue into second quarter although to a Slightly abated rate level. And then as we enter the second half of the year that will no longer be a headwind for us going forward as it gets To a diminished level.
And then we'll see what happens beyond that in terms of as the economy improves, do you see more bank mergers, Which tends to be a driver of termination fees, but that headwind subsides a bit in Q2 and then anticipate it not being a Headwind that we discuss in the second half of the year.
Understood. Thanks so much for the helpful detail.
Sure. Thank you.
Thank you. Our next question comes from Ramzi Alasal from Barclays. Your line is open.
Hi, guys. Thanks for taking my question here. I wanted to ask about the broader M and A strategy. Should we expect more deals sort of similar size Pineapple and Andat? Or would you take a swing at something a little larger if the or maybe more transformative if the opportunity presented itself?
Well, I'd say first, we feel great about our capabilities and the total hand we have. The tuck ins have played very, very well for us for a very long time. I think you'll look at On Dot and you're going to See that gets spread across the product base to client base, that digital capability in an integrated fashion. I think Pineapple takes us in another area around LISD capability. I think If you look at Radius 8, it is about bringing that across this large platform.
So they play very, very well for us. We've been very committed to our capital allocation strategy, our tried and true, And all these acquisitions sit exactly within that envelope. But of course, We pay attention and think about everything and this is a dynamic world that keeps changing. So, I think we're pretty committed to the path we're on, and we think about all things in the market, all things around the table. And so it has to work for our shareholders for it to make sense, and that's what we love our capital allocation strategy.
All right. That makes a lot of sense. Lastly from me, this is just a point of clarification and forgive me if you guys already covered off on In the slide deck, you mentioned pressure on long cycle credit processing in the payment segment. What is that exactly? And is it a headwind that you expect to
Yes, I would that is essentially our credit issue processing business It is not transaction driven. And so as we see the economy improve in more active accounts, We'll see an improvement in that revenue and so that's a bit of a lagging indicator and we expect that To take place really in the second half as the economy improves, we'll see more activity. In addition, you'll get different comparisons. And so we think that helps Lift the growth of the payment segment and obviously the credit issuer processing.
Great. Got it. Okay. So that's just a euphemism for credit issuer processing. Okay.
Terrific. Thanks so much. Thank you.
Thank you. And our last question comes from George Mihalos from Cowen. Your line is open.
Hey guys, thanks for squeezing me in. Just wanted to ask, kicking things off on the merchant side, the nice momentum you're seeing there. As it relates to EMEA, we're hearing anecdotally that things are getting better throughout the course of April, particularly in the UK. And I'm just curious if you could share any high level Trends that you might be seeing through the month of April, and would you guys expect that region To be in the black in 2Q, is there any reason why that's not possible?
I think the UK We could feel it. We see it. I think I referred to that potentially somewhere along the line here today. I think Ireland still has challenges, but our expectation Is that the second half, EMEA is in a recovery. I won't want to Be thinking too hard about this quarter itself as much as the full year, and we believe the EMEA business will perform well in the second I think it's been under pressure in the first half.
Certainly feels like it's in the right trajectory though as you say the restrictions are beginning to lift UK in particular and hopefully some of the other countries in that region soon.
Okay. That's helpful. And just as a quick follow-up, Bob, on the FinTech segment, should we continue to believe, I mean, it seems like It's tracking in the right direction, but is the 4% to 6% growth for FinTech, I think that you laid out last quarter, is that still on the table for 2021 or how are you guys feeling about that Yes.
We didn't give a guidance for 2021. That 4% to 6% is our medium term guidance. We don't give specific in year guidance on our ex Muir segment level. I'll just reiterate, we did we printed a 2. If you adjust for the periodic revenue, it's a 3.5 in the quarter.
That subsides pretty meaningfully, in the Q2 and is no longer a headwind in the 3rd Q4. So We'll see a nice uptick in that segment and believe we'll be in that range in the second half of the year for sure.
Okay. Thank you, guys. Congrats on the results.
Thank you very much.
I'd like to thank everybody for