Robert Hau: Dave, I actually don’t have that right at my fingertips. It’s not a number we’ve disclosed previously. Let me get that. But I think one of the elements or one of the reasons we disclosed that and brought that to everybody this year – or excuse me, this quarter, is to talk about exactly what Frank just pointed out, is this long-term transition from years ago, being a processing-only business, to now a full service capability merchant acquirer. In our March 2022 investor conference on our Merchant business, we talked extensively about building out that Clover software value-added services capability, becoming an operating system. We have an operating system for SMB clients. We have an operating system for enterprise clients.
And so as the processing eases a bit from a volume standpoint, the impact to the revenue is a fraction of the processing volume delta. And in many cases, that processing volume becomes merchant acquiring volume at a much better value point for the company because, not only are we doing merchant acquiring, but we’re selling the value-added services. And that delta you saw in Q3 from an overall volume to essentially an enterprise plus SMB volume at 6% is more representative of the overall volume opportunity for the company. And that’s why you’re seeing a very strong organic growth rate in the Merchant segment this quarter, last quarter, last year, the previous year.
David Koning: Yes. All good. Thanks, guys.
Operator: Next, we’ll go to the line of Ramsey El-Assal from Barclays. Please go ahead.
Ramsey El-Assal: Hi, thanks so much for taking my question this morning. I wanted to ask about the margin outperformance you guys are seeing. And taking a step back, thinking about it in terms of how much is driven by a better business mix, meaning more Clover software, Zelle, et cetera, versus sort of a more active expense management or expense control. And I’m just asking in the context of thinking about how sustainable the margin drivers you’re seeing this year may be kind of over time, if that makes sense.
Frank Bisignano: Yes. I would say we’re always working on how to make things better, right? That’s just every day, we get up, how do we make it better? How do we make it better for our clients? How do we eliminate work that’s not necessary? How do we deliver better quality? How do we do all that? And that’s an element of it. The other element of it is high-quality revenue growth. And our incremental drop-through is very, very strong. So I would say investment, we’ve been completely plowed into, meaning we’re continuing to build our business and invest in our business and deploy resource to it. We have – we always are working on productivity and quality. We talk about a year of operational excellence. But our incremental drop-through rate is very, very strong on the business we have.
So I would take it as a mix element. We’re never going to be just one or the other. As I said in my remarks, we do have a lot of discretionary investment, but we feel great about that. And that’s why the Melio product will be out in the summer of ‘24, as an example. So high-quality revenue, good incremental drop-through, continually driving better client stats and productivity. So it’s got to be all of it. We don’t do just one.
Ramsey El-Assal: Okay. So sort of all of the above. A quick follow-up for me. On the Acceptance volumes, how should we think about that wholesale part of the business evolving over time? Do you see kind of a point of stabilization coming? Or is this a business that we should sort of think of kind of winding down very gradually over a long period of time?
Frank Bisignano: Well, first of all, we talked about it as flat, right? We talked about you should expect it to be fundamentally flat by $10 billion. Now that may mean less volume, even better yield in there, right? There’s a big mix of what’s in processing. We have an ISO business and we have a bank processing business. And by the way, tomorrow, we could bid on another piece of processing. I view it, as I’ve always said, and maybe this is just my heritage and it won’t ring with everybody, as running a correspondent clearing business and running a wholesale broker dealer. I’m never going to get the correspondent clearing business to be a high growth, but it definitely is $1 billion for us that covers a lot of fixed. But our emphasis is on growing our direct business. So I’ll turn over to Bob. And I want you to have that picture. We don’t see it as zero, we said it’d be flat in ‘25.
Robert Hau: Ramsey, that flat that Frank is referring to is when we guided to $10 billion of merchant revenue by 2025. In what, 2 – almost 2 years ago now, we were doing about $900 million to $1 billion worth of processing revenue. Our $10 billion outlook assumed that, that would remain flat over that time period. There will be shifts to volume, you’ll get a little bit of price, there will be adds, there will be deletes, there’s some – I think I used the term ebbs and flows in the processing volume. But overall, I anticipate it to be about that $1 billion, which means it was, order of magnitude, 13%, 14% of our revenue. By 2025, it will end up being 10% of our revenue as we grow the full merchant acquiring capability and continue to grow that at a much faster pace than our processing.
But that’s a nice $1 billion revenue business for us that we’re happy to have and we’ll continue to manage that effectively. And then before we go to the next question, just going back to David, your question around the enterprise and SMB volume or volume ex processing, it is an acceleration. That 6% that we’re seeing in Q3 is a bit of an acceleration from Q2 levels. So continue to see good growth, and that’s what’s driving the top line for us. We’ll move to the next question.
Operator: Yes, absolutely. And for our final question, we’ll go to Vasu Govil from KBW. Please go ahead.
Vasundhara Govil: Hi, thank you for taking my questions and congrats on the great quarter. I guess, my first one for Frank. Frank, CFPB just released these open banking regulation proposal. Assuming that goes into effect some time next year, is that a revenue opportunity for Fiserv as banks have to comply? Or do you think that was sort of already happened organically, and so not that meaningful…
Frank Bisignano: I think it was really organically going on. I mean – but if you look at what we just did with Plaid, we’re always going to veer in to bringing more capability to out bank partners. We’re a client business. We run a huge client franchise. We’re out talking to them every day, whether it was what we did at Forum with 3,000 clients, or what we do at [AGBA] or what we do by having 29 women CEOs here for an all-day conference, we want to listen to our clients. And so open banking has been going on, and we’re continuing to align in a way that try our client for franchise.
Vasundhara Govil: Great. And then quick one for you, Bob. Just I know last year, towards the end of the year, you guys had some pricing benefit that helped revenue growth. Just how should we think about the fourth quarter in terms of spreads versus volume growth in the Acceptance segment?
