Welcome to the Fiserv Third Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. At this time, I'll turn the call over to Stephanie Gregor, Vice President of Investor Relations at Fiserv.

Thank you, and good afternoon. With me today are Jeff Yabuki, our Chief Executive Officer; Tom Hirsch, our Chief Financial Officer; and Mark Ernst, our Chief Operating Officer. Please note that this afternoon's earnings release and the supplemental presentation for the quarter are available on the Investor Relations section of our website at fiserv.com. Our remarks today will include forward-looking statements about, among other matters, expected operating and financial results and strategic initiatives. Forward-looking statements may differ materially from actual results and are subject to a number of risks and uncertainties. Please refer to our earnings release for a discussion of these risk factors. You should also refer to our materials for today's call for an explanation of the non-GAAP financial measures discussed in this conference call, along with a reconciliation of those measures to the nearest applicable GAAP measures. These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results and prior reported results and as a basis for planning and forecasting for future periods. Unless stated otherwise, performance comparisons made throughout this call are year-over-year, and references to the year represent current year results through the end of the third quarter. And with that, I will turn the call over to Jeff.

Thanks, Stephanie, and good afternoon, everyone. Results for the third quarter were strong across the board. We are executing on our business model, delivering value to clients and developing products and services that we believe will contribute to increasing our internal revenue growth rate into 2015 and beyond. We achieved 5% adjusted internal revenue growth in the quarter, led by 8% adjusted internal revenue growth in our Payments segment. For the first 3 quarters of the year, adjusted internal revenue growth is above 4%, well within our guidance range and a solid increase over the 2% growth in the comparable period last year. Adjusted operating margin performance continued to be healthy, increasing 70 basis points in the quarter and year-to-date. The 31.2% rate in the quarter is the highest performance since the launch of our Fiserv 2.0 framework in 2006. We view operating margin as an important outcome of our business model and a key measure of the differentiated value that our solutions provide for Fiserv clients. Adjusted earnings per share increased 10% in the quarter and is up 13% through September 30. Free cash flow is excellent in the quarter and is up 13% for the year to $674 million. Free cash flow per share, one of our most important performance metrics, is up 18% to $2.65 for the year. Total sales in the quarter was up 27% over the prior year and has increased 14% through September. We are well positioned to close out 2014 as one of our strongest sales years ever. Now let me provide an update on our 2014 enterprise priorities which, as a reminder, are: first, to continue building high-quality revenue growth while meeting our earnings commitments; second, extend market momentum to deepen client relationships with a larger share of our strategic solutions; and…

Thanks, Jeff, and good afternoon, everyone. Adjusted revenue was $1.2 billion in the quarter and $3.5 billion for the first 9 months of the year. Our adjusted internal revenue growth rate was 5% in the quarter and is above 4% year-to-date, showing strong acceleration over the prior year and at the upper end of our 2014 growth rate guidance. Adjusted operating income increased 7% in both the quarter and first 9 months to $370 million and $1.1 billion, respectively. Adjusted operating margin was up 70 basis points to 31.2% in the quarter and expanded 60 basis points sequentially. Year-to-date, adjusted operating margin is up 70 basis points to 30.5%. As Jeff mentioned, we have an intense focus on growing our high-quality, recurring revenue businesses. This effort includes scaling up our newer businesses such as Mobiliti ASP, along with executing on our Operational Effectiveness initiatives, which contribute meaningfully to the strong margin performance. Adjusted earnings per share increased 10% in the quarter and 13% year-to-date. As important, our earnings this year have converted into free cash flow for our shareholders at an even higher rate, growing free cash flow per share by 18% to $2.65. Now onto the segment results. Adjusted internal revenue growth in the Payments segment was 8% in the quarter and is 7% for the year. The strong growth was led by client and transaction growth in card services, digital channels, bill payment and our Output Solutions businesses. We signed 40 new debit clients in the quarter and have added nearly 100 for the year. In addition to offering compelling integration advantages, we continue to provide additional value for our clients through add-on services geared to enhance risk and fraud capabilities, EMV, tokenization and other innovation needed to stay abreast of a rapidly changing payments landscape. The combination…

Thanks, Tom. As we mentioned upfront, sales for the quarter were strong at 128% of quota and 101% in Payment year-to-date. Importantly, actual sales were at a record level, up 27% in the quarter. Total sales for the year are up 14%. We are seeing strong demand across our product portfolio. In particular, there is growing interest in our large account processing services, digital channels, payments, including real time solutions, along with early traction in our focused international strategy. Integrated sales were also strong in the quarter at $70 million and are $172 million for the year. The leading solutions were Mobiliti ASP, bill payment, Source Capture, card solutions and online banking. We are well positioned to achieve our $250 million integrated sales target for the year. We have recorded $50 million of Operational Effectiveness savings in the first 9 months of the year or 83% of our $60 million annual target. Even with the majority of the Open solutions cost synergies accounted for, we continue to see a long runway of opportunity and believe we will drive economic value for a number of years through our core Operational Effectiveness programs. The client environment remains stable in the quarter. There were only 4 regulatory actions in the period and 19 year-to-date, which is just over half as many as last year. We expect regulatory actions will continue to approach normal levels, and we also believe M&A activity will remain quite active. Financial institutions have generally remained committed to their spending plans, an important -- an improvement over the trailing off we have seen occur over the last several years. Technology spend continues to be weighted to areas such as digital experience, regulatory compliance, cost effectiveness and solutions that enable financial institutions to generate additional revenue. The meatiest and most significant…

[Operator Instructions] Our first question comes from Ramsey El-Assal from Jefferies.

How should we think about the long-term organic growth trajectory in the Financial solutions segment? Is where it's kind of landing now sort of what we should be expecting and modeling going forward? Or what are some potential input there that might see that accelerate a bit?

Yes, thanks, Ramsey, it's a good question. We have said for several years now that we expected our internal revenue growth rate would be able to step up each year for a number of years. And as we mentioned, we've got -- obviously, we're stepped-up nicely for this year. And based on what we can see moving forward, we expect to see another step-up into '15. And that growth, we did expect it would have a bit of a bias for the Payments segment given those kinds of solutions and the growth characteristics of that business. However, we're actually pretty bullish about what's going on in the Financial segment. We mentioned we signed our 50th DNA client in the quarter, have 11 of them live, which means, obviously, we have 39 still in backlog. But we also are winning a number of large transactions across the landscape. So whether it's in our Signature platform, Premier or in DNA, we've got a lot of good momentum and backlog. And we -- we're just really starting to see those clients go live based on actually the signings that we talked about even last year at Investor Day. So we have good visibility there. We believe we'll continue to step up. We're also actually pretty excited about what's going on in our lending businesses. We are seeing financial institutions realize that the lending area is and is the place over time where they're probably the most experienced to -- at making money. And we're seeing solutions get evaluated and looking for potential upgrades, both in the origination and on the servicing side. So we see some nice macros in both of those areas. We think that will translate to some better growth for us moving forward in the Financial segment. So I would say that we do expect that to grow -- to continue to grow. I would say that, that will step. But again, be slightly less than the kind of growth acceleration we're seeing on the Payments side.

And then I'll just add one more thing to that. We'd probably be around international, which is included in that particular segment. And as we mentioned on the call, we've had some very difficult comparisons and that probably impacting the company overall by about 1%, and the -- so going into the Financial segment by about 1% from a growth rate standpoint. So I think as we look over the next several years, that we're going to continue to grow that business and that should help us accelerate growth in the segment overall as we look into the next couple of years.

And none of the softness you mentioned from the international comparisons, none of that you perceive to be anything related to like a macro headwind from the different regions you're operating? It really just has to do with a tough compare?

That's correct, yes.

Yes, actually, we would say that on balance, some of the technology solutions that we've introduced, such as Agiliti in the U.K., actually are riding some macro tailwinds as opposed to the office. We're pretty focused on what we do internationally, so we feel good about the growth characteristics moving forward.

Okay. One last one for me. You mentioned you recently converted a larger bill payment client. You expect to implement another similar-sized client. Maybe you can just give us an update or some commentary on sort of what sizable deals, that maybe you've mentioned in the past, remain in the sort of -- in the backlog pipeline waiting to be implemented. Once we get these 2 large deals sort of through, does that sort of cap off the implementation cycle you've kind of launched several cycles ago with a nice big win?

Yes, the 2 clients that Tom referenced in his prepared remarks are the 2 remaining larger clients that we had called out, actually one of them even a couple of years ago. So we're finally starting to go live. That will anniversary kind of late 2015. And so those named clients, we would be through. By the same token, we've had a couple of hundred bill payment clients that we signed this quarter -- I'm sorry, this year, and a number of them sizable, not at the named level but the bulk of the clients, we're still seeing a high level of attractiveness on that front. And we're also seeing good focus on expedited bill payment as one of the add-on capabilities across the entire network of several thousand bill payment installs. So we think we're in pretty good shape moving forward.

Dave Togut from Evercore.

Given the 50 new signings you've mentioned for DNA, what piece will be signing actually to convert over the next 12 months? And can financial organic growth get up to a mid-single-digit level, let's say, by the end of 2015?

Yes. David, we aren't in the business of giving guidance for '15, and Tom would especially not want us to talk about the segment-by-segment guidance. What I would say is that the majority of the meaningful installs will start to come live at the beginning -- sorry, towards the middle of next year. Long install cycle, so that will take some time. And also, remember that part of our core value proposition is not just delivering the account processing fees, but also delivering many of the surround products: Debit, channel, some of the payment solutions, risk, lending. So a lot of ancillary content that starts to go live. That's the good news. The bad news is it takes a little bit longer to move through those implementations cycles. So I think you'll see -- I actually don't think we'll hit our peak performance in the Financial segment until probably into the '16 time frame just given the momentum that we have now. And I'll also tell you that as we mentioned in our prepared remarks, we are quite enthusiastic right now about the kinds of evaluations that are occurring in the market in terms of larger institutions taking a look at the modern real-time oriented platforms that frankly, had it not been for the acquisition of Open Solutions, we probably would not be in line for some of those larger institution evaluations, those more dominated by the non-U.S. players. So that is going to also give us momentum. As far as the longer-range modeling goes, I think we'll say we'll continue to expect those step-ups, and we'll continue to keep you informed as to how our progress is looking.

Yes, David, I'd probably just add to that. As you see our Payments segment year-to-date growth at about 7% compared to 4% this time last year. And the Financial segment is actually at 2% compared to flat, so we have seen some good growth there. I think the other thing, to Jeff's point, is one of the important things around these deals and these large AP or the DNA deals, is a lot of that surround revenue really shows up in our Payments segment. So it's very important to note that a lot of the bill payment and debit revenue continues to be shown in the Payments segment revenue growth, while we will get the core processing revenue that flows through Financial. It's really an important driver of future success really in both segments because that revenue shows up in both of our operating segments.

Understood. Just ratably, it looks like you're ahead of year-to-date plan in terms of Operational Effectiveness, 83% of target. Do you expect to significantly exceed the cost take-out target this year as you have in the past?

We're on track. As you well know, we're doing very well on the Open Solutions synergies. And so we're on track for a good year in regards to that particular metric. And we're very pleased. You can see it show up. As Jeff kind of highlighted, David, you've been with us for long period of time, or followed the company. We had our highest margin in fourth -- in the third quarter since the launch of Fiserv 2.0 back in 2006, so we're pleased with that. A big part of that has been our Operational Effectiveness initiatives. And again, we have more opportunities as we continue to look forward to continue to expand margins as Jeff talked about. We're very confident that to a number of things around the scaling of our new solutions, our Operational Effectiveness initiatives and a host of other things.

Just a quick final question, Tom. Third quarter term fees versus year ago, and then September 30 share count?

Yes. As you're aware, David, the level of termination fees really varies from period to period based upon the number and kind of the size of clients acquired. And just for a little backdrop, termination fees are usually about 1% of our total revenues, and they really fluctuate year-on-year as you know. We believe overall, these types of fees this year are up across the industry, and we've seen the benefit this year from termination fees also. Your specific question around the quarter, term fees were up around $10 million in the quarter versus the prior year. And it was roughly around $5 million in both of the segments. And as we head into the fourth quarter, we expect a more difficult comparison just given the -- what we had in the prior year.

And then 9/30 share count?

I'm sorry. So I think 245.3 million.

Adam Dahms from Baird.

So you guys serve more banks than pretty much anyone. And we keep hearing that the banks are willing to give up about 15 bps of their interchange with regards to Apple Pay. I'm wondering if you guys are hearing anything on why they're willing to give up this chunk of interchange? And then on that, are there any potential economic benefit for Fiserv if these banks kind of work to integrate these initiatives?

Sure. So Adam, I would -- I mean, at least in the conversations that we've typically had with institutions, there is a level of energy and excitement around the pretense that Apple Pay -- and frankly, other kinds of electronic transaction portals at point of sale will convert cash and to a lesser degree, check transactions to electronic, which will carry a level of interchange. So there's been a belief that, that would, in effect, wipe out the amount of -- or at least an optimism that it will wipe out the incremental interchange or basis points that have been shared with Apple. There's also some more technical stuff in quotes around card present and card not present rates, in which there is an agreement that typically, some transactions that would have been treated as card not present will now be treated as card present given the security, and that changes the interchange rates as well. So I think there's kind of a net-net around that, that is going to have -- that has banks be willing to do this.

Great. And any benefits there? Any way you guys can kind of get in on it?

Yes, I'm sorry. I missed that element of it. I mean obviously, as a processor, any of the transactions that are converted to a card-based transaction, we've got. If they're debit, we've got debit processing fees. We have network fees. We have -- and we just -- one of the things that I like is just training consumers to be more -- kind of more -- have a higher propensity to use a digital payment mechanism. And so using your mobile phone at point of sale is going to make you just that much more interested in using your mobile phone for non-point of sale transactions which, as you know, is a very important part of our business model, whether it's around bill payment or person-to-person transaction. So we like that training element as well.

Tien-tsin Huang from JPMorgan Securities.

I guess on the total sales, I just want to ask on the total sales, up 27%, quite strong. Sounds like it's going to help fuel acceleration to next year. That makes sense. Just curious, has this continued into October? And have client priorities just changed? Just wanted to get a little more color on what's driving this.

Yes, thanks, Tien-tsin. There are couple of things going on in the quarter. We mentioned, you may remember that after Q2, we were -- we had a little bit of a light Q2. We saw some transactions slip into Q3, and so we obviously picked those up. But we are seeing the institutions continue to spend. And as I think you know, you -- you're one of the folks who had been monitoring spending and seeing it trail off in the second half of the year the last several years. And we're not seeing that kind of trailing occur. So we're seeing the interest at the FI level continue to be there. We're seeing strong interest in activity on the lending side, both from core financial institutions as well as some of the nontraditional banks. So some of the non-bank lenders who are out there making -- investigating and making purchases in that space, and of course, in the online digital channels space as well as payment. So it's really a combination of all of those things coming together. As far as October goes, I hate to say this, but most sales forces take a little bit of a breather after they close a quarter. We're encouraged by how our pipeline looks moving forward and we're, frankly, counting on a strong finish to the year.

Got it. Good to know. I guess as my follow-up, I heard the instant payment demand and whatnot. I'm curious given a lot of talk about same-day ACH again and the clearing house sort of creating this real time payment system, I guess, in parallel with some other things that are out there. What does that mean, Jeff, for Fiserv? Is it good, bad, indifferent? Love to hear your feedback.

Yes, it's -- I think it's great news, actually. And the fact that there's almost unanimous support across the industry for a methodology that allows consumers and businesses to move money at the speed of their choice is quite positive. By the same token, believing that the right answer, in the near term at least, is the construction of a new rail, I think is unlikely to -- I have a hard time seeing how that solution allows consumers and businesses to transact in the near term. So I think you're going to see some kind of -- a set of hybrid solutions. I think we're all looking at what are the best ways to get to the end, which is allowing that choice in transactional speed. In the near to mid-term, I am highly confident that our solutions will play a role in how institutions will transact. And I think it will allow us to bring the kind of choice that we've talked about to our applications such as bill payment and Popmoney, that will fit very well into this new consumer experience that value speed potentially above all else. So we're pretty bullish about it and pretty excited about it.

Paul Condra from BMO Capital Markets.

I wonder if maybe you can talk a little bit more about what you're seeing for EMV. I know you talked about potential opportunities there. But any deals that you're winning and any trends that you're noticing you could give more detail on?

Sure, Paul, thanks. The -- clearly, lots and lots of conversations around EMV. Those conversations got a little bit more complicated around the Apple Pay announcement just in terms of having mind share moving around. But there's no question that it's not a matter of if, it's just a matter of when, right? We see all the same data that you all see around the number of cards, both credit and debit, that are anticipated to move. Most of our card processing is centered around debit. Most of our card production is centered around debit. We were very happy to see that, for example, Bank of America, announced they're going to reissue their debit cards this year with chip. I think we've seen some of the other large institutions do that. We think that's very good news, both in terms of -- for the industry and for consumers around how they transact but as well as for our business. To the second part of your question really around deals that we're winning, we have a very good position. We really aren't in a place where we can talk about it. But I would say that we're doing at least as well as we thought we would do, if not better. Now again, very few cards have actually been reissued. We think that those reissue cycles will run over the next several years. I would guess that '15 will be the lowest of all of the years, but there's going to be a lot of activity in that space over the next several years.

That's helpful. And then just trying to understand, are your bank lines Apple Pay enabled? And then if they want to be, do you have some kind of role to play in that?

Sure. So a number of our institutions are currently Apple Pay enabled, and we work with our clients to make sure that they're enabled to do the things that are necessary to become -- to have become enrolled in Apple Pay. There's a lot of noise in the market right now around deadlines and dates, and I think much of that is settling out. I think that yesterday there was an announcement coming out of Apple that about 1 million cards are currently enrolled in Apple Pay. So obviously, we're quite early. I think that's going to evolve. But as the processor to the client, we do work in partnership to make sure that they have the capabilities that they need to participate in that program.

Jim Schneider from Goldman Sachs.

One question on bill pay. You talked about some -- the new large client win you have coming out at the end of the year and some -- your other client wins. Do you think the bill payment transactions can get sustainably north of 5% for the foreseeable future as we go into 2015 and beyond?

So I think -- I do think the natural rate of bill payment is actually in excess of 5%, just given the -- how transactions are electronifying. Today, something -- or in round numbers, the number of paper payments related to bill are still around 50%. So there's a heck of a lot of growth that is still available in the market. I think in order for that to happen, you've got a couple of things that have to occur. You have to continue to see this convergence between payment enabling and digital. I think that's one of the big catalysts that you see out there. You've got to have more opportunities for consumers to choose the speed of their choice or to select the speed of their choice when making a payment. That's a critical element of it, and that's one of the things that we were talking about earlier around the creation of some of these rail. We're actually very enthusiastic in that area. And then third, we have to continue to win some number of transactions. The majority of our -- of institutions, which we do very well, the majority of our growth in payments over the last several years has really come from winning new clients. We've got a lot of focus now on how do we make those clients more capable in terms of the experience in driving more payment volume. The last thing I want to talk about, because I think it's really important, Jim, is in that business, there are 2 ways that we grow revenue. We grow revenue on the basis of new transactions or additional transactions, and we grow revenue by increasing the average value of every transaction. And one of the areas in which we're very focused is on driving expedited payments because we see that as an opportunity to take some of the 1.3 billion transactions that are in existence today, have them go a little bit faster and create more revenue per transaction. We have risk capabilities, we have customization and other services that we're delivering in that space. And frankly, that's an area where we've not done anywhere near all we can do. And I see that to be a nice opportunity to drive revenue growth in parallel to driving just core transaction growth.

That's helpful. And then as a follow-up, with respect to your -- as we look into 2015 and looking at your 50 basis points or better operating margin target over the long term, can you talk to how much of that is just going to be driven by normal leverage in the business versus how much do you think you can wring out in terms of additional cost synergies above and beyond the open cost synergies that you've realized in 2014? Any kind of color on the additional synergies to be realized on the cost side would be helpful.

Yes, so let -- Tom, why don't you...

Yes. Jim, is your question right around open or the general -- we're going to continue down the pathway of our Operational Effectiveness initiatives. And so that's going to be clearly a component of what we're going to have over the next 3 years. But it is going to be combined with the scaling of our newer solutions, things like Mobiliti, where we've made a number of investments and we are getting to a nice scale position as we move forward over the next several years. So again, it's early for 2015 from a guidance standpoint, but it's going to be a combination of activities.

Yes. And Jim, I would say -- I don't have the data in front of me. I'll have Stephanie follow up with you. But we still have a fairly large pool of Operational Effectiveness saves in which we have identified. And then we basically look to optimize our effort across the company, putting some of it to growing internal revenue, putting some of it to continuing to take out and restructure our expenses and our processes to deliver more value. So we still have a good-sized pool there. But I think to your question, we're going to see a fair amount of leverage over the next few years in scaling some of the solutions like the Mobiliti ASP solution that we talk a lot about. We're up to, I think, the number was 65% growth in subscribers to 2.5 million. If you look at our Payments margin over the last couple of years, you'll see that those margins have been under pressure because most of our investments have been in the Payments segment over the last couple of years. Those are now starting to convert, and we'll see that leverage come through on our result.

Chris Shutler from William Blair & Company.

So first on Mobiliti, I know that you're seeing pretty strong uptake there. Maybe just, Jeff, could you remind us the revenue model? Can you give us some rough sense of where revenue stands today for Mobiliti? And then if you look at usage within your FI client base, what percentage of end clients that actually have access to the platform are using it today?

So good questions, Chris. The model, there are 3 core variations on the Mobiliti model. There is a license and services straight model. So the larger institutions, the U.S. banks of the world, we sell them the license. We work with them on a services basis. And then we continue to work with them to modify as they deem appropriate. And then they would pay us on kind of a seat basis. The second variation of the model is taking the first piece and then adding hosting. So we would actually host it in our data centers and we do that for several larger clients. And then the third one is really the ASP model. So we build it. We run it in our data centers. And the model for that is the institutions pay us for each of the users, we refer to them as subscribers, on a monthly basis. And they would be paying us on the basis of are they using kind of the core phone piece alone. Do they have tablet on top of that? And then we also have been talking about Mobiliti for business, which is the next iteration of our ASP or our cloud-based offering. So those are the 3 different revenue models that we have today. As far as the overall revenue, we don't break that out. Historically at Investor Day, we've talked about where we sit in that business. I'm sure we'll do the same thing when we do our Investor Day in June. Probably what I can tell you is I think we're still on the fairly early innings of what that mobile opportunity looks like as compared to where our online banking business is. If you think about the users, one of the benefits, one of the embedded benefits that we have is that historically, especially for the smaller institutions, Mobiliti integration occurs through the online banking platform. And because we have tens of millions of users using that platform, it's a simpler and easier way to go. And we believe over time, those institutions will end up selecting us. There's still a very large number of institutions who have not yet selected Mobiliti. And we believe that, that will continue to grow for us over time.

Great. And then just a couple of real quick follow-ups. One is on the buyback. And you guys have been quite aggressive this year, I think 789 repurchased relative to kind of 460 to 580 the last couple of years at this time of year. Just any kind of thoughts why, maybe you've been more aggressive? And then secondly, the depreciation and amortization line looked like it fell off a decent bit sequentially. Just want to make sure, as we model that going forward, that it should be fairly consistent with Q3 levels.

Yes. So I'll take the share repurchase question. I'll let Tom deal with the more technical one, and then he can comment as well. But on the share repurchase question, remember last year, we also acquired Open Solutions, so that was a fairly hefty allocation of capital. What we've said over time is we're going to allocate our capital in a way that we think makes the most sense for shareholders and that we use share repurchase as our capital allocation benchmark. We've not completed any acquisitions this year. And we believe that the combination of increasing internal revenue growth, market momentum and the margin runway that we see, that we believe that we've got an attractive business over time. And therefore, the repurchase has made sense, and we'll continue to look at that on a period-by-period basis.

Yes. And Chris, regarding -- I'll take this offline with you. But just to me, when I look at the cash flow statement, it's relatively consistent for the 9 months with where we were in the last 9 months and even on a quarter basis. Let me take that offline, you can give me a shout, and then we can go through that.

Ashwin Shirvaikar from Citigroup.

So good performance, especially on the margin front. The question I have is of the margin improvement that you had in total, what was the -- is it possible to separate out the contribution of operating effectiveness versus synergies related to Open to the extent you still have them? It has an impact on go-forward expectations, I guess, with regards to how long you guys can continue improving margins at this pace?

Yes, Ashwin, let me start with it, and then Tom and Mark can add in as it makes sense. It's difficult to look at all of the contributors to margin on a pure vertical or siloed basis. I mean we have a number of different contributors, Operational Effectiveness, which includes kind of the core muscle that we built over the years to reengineer our cost structures and our processes to be more effective. You've got the synergies from Open, you've got the scaling of some of our solutions. But then offsetting that, you have investments in new technologies and other areas in which we know we have to build so that we can continue to grow our level of high-quality, sustainable revenue growth. And so in any year, we're making trade-offs that allow us to invest the amount of money that we need to invest at an enterprise level. One of the things that we talked about a lot is we could have higher margins if we didn't see opportunities to invest. Thankfully, we're in a situation where we do have that. And so we use those levers simultaneously to make sure that we are in a place where we can grow the business over a long period of time and also expand margins. So -- and when -- certainly even when certain streams of revenues come in a different way, we're always looking, what are the kinds of things that we can do to continue to make sure that we're making the right investment so that shareholders benefit and clients benefit over a long period of time.

The one thing I'd add to that is to the point -- to your point about -- so how sustainable is that 50 basis point or greater margin expansion and how many years does -- is that good for? Sitting here today, we can clearly see plenty of reengineering opportunities across the company and the portfolio of things that we do that give us high confidence that, that long-term objective is, in fact, a long-term attainable objective.

That's good to know. One follow-up question on a separate topic, which is bill pay. Obviously, you guys have had a lot of good, I guess, market share-driven growth. But as you sort of look at what's left, right, I mean, you got -- you already signed a rather large client. Do you see sort of a lost diminishing returns with regards to you have to now go sign a lot more midsized clients in order to achieve the same thing that you did with the signing of TD or Wells or so on?

Yes. I'm sorry, Ashwin. Did I -- I didn't mean to cut you off.

No, go ahead.

So I would say that we are in the fortunate position to have a nice market share across the largest institutions in the U.S. And where we have to go moving forward is in the -- kind of the middle of the market, where we actually have a surprisingly low level of penetration. So we have a very attractive penetration rate across the top 20 institutions. And -- but if you look at the top 20 kind of -- I'm sorry, the #21 to call the #50, we're surprisingly low penetrated in those markets. And so we have real opportunities. And if you go back and look at press releases over the last couple of years, you'll see that we're just beginning to win in those spaces. So we won't have the one big win probably, but we'll have 2 or 3 wins that will actually look bigger than those one wins. So we're still pretty optimistic and pretty bullish about that end of the market, and -- but I do want to also reinforce that today, we're still seeing a tiny percentage of the payments per household that are actually being executed, even by our most loyal users. So I do think there's a big opportunity for there -- for us in that space. And some of the convergence that we talked about earlier should also help that. And then lastly, we obviously have the revenue per transaction commentary that we talked about earlier, so still a lot of opportunity in that space overall.

Absolutely. If I can squeeze one more in. Is there any benefit or detriment either way, I'm just kind of opening up for you with regards to what happens with the bill payment business as your real time payment business kind of grows? Is there a cost benefit you can get from that or -- I mean is it not related then? I just asked.

Yes. No, so actually, we shared a little bit of this at our last Investor Day. I mean, we are actually quite bullish that the Bill Payment business will benefit in 2 ways by real time. First is that some percentage of the 1.3-or-so billion transactions a year will be converted to a real-time transaction, and that will drive value for the financial institutions and then drive some incremental revenue for us on a per transaction basis. But I actually think the biggest opportunity is not the conversion of existing clients. But I think there is an educational element that's missing in the market that when someone wants to pay a bill right now, they aren't thinking about going to their bank. So they aren't even bothering to go to the bank aggregator site to do that. They're going to bill or direct, they're going to a walk-in counter. They're doing whatever they're doing, but they're not going to the aggregation site. And that should bring in, in my opinion, many, many, many more transactions than we're seeing today that will not only add to the transaction count, but actually come in at a higher level. And that's really not my opinion. That's the opinion of the market participants that we're merely supporting as we build our technology out.

Kartik Mehta from Northcoast Research.

Jeff, question for you. You've talked a lot about Mobiliti, you talked a little bit about Popmoney and bill payment. And maybe you already do this, but if you don't, is there an opportunity for you to create a payment gateway of sort to sell to the banks? And by payment gateway, something that -- where a bank can have bill payment, Mobiliti or Popmoney all on one screen to be able to tell to its consumers, if that make sense?

Yes. I mean we do see that and that's a bit of how we operate today. It's one of the reasons why we said that the online banking and the mobile experiences are so important. And so to the extent that we can provide that, we think we have a very significant advantage in delivering our non or beyond point of sale payments capability. So bill pay, Popmoney, transfer payments -- I'm sorry, TransferNow, those kinds of things. And so -- and then when you wrap it with speed, right, kind of the speed of choice and then the intelligence that underlies that, we think there's a definite advantage to us. And frankly, we've seen this playing out in the market for the last 3 or 4 years. The reason why we've done so well in areas such as account processing is we're delivering this very cool bundle of not just any technologies but award-winning, innovative technologies that our clients get. And when the account processing selection processes occur, we always hear, "Hey, we're selecting Fiserv on the benefit of the integration advantages that we can deliver."

And then, Jeff, there's been a lot of talk and you've talked about EMV and just the change in the payment landscape that's happening. Are there any holes you need to fill as a result of these new changes and the need to acquire any technology or services that would position you better to win deals?

No. I mean, we're actually quite well-positioned right now. We've built our own -- again, one of the investments that we've been making is building out our capability to make sure that when the EMV cycle starts, that we are absolutely ready to go, and that's across our Card Solutions businesses as well as our Output Solutions businesses. So we're in very good shape in that area.

And Tom, just a clarification. I want to make sure I understood you right. Tom, did you say that your termination fees in 3Q '14 were $10 million greater than 3Q '13?

That's correct. Yes, about $5 million in each segment.

Our last question comes from Bryan Keane from Deutsche Bank.

This is Ashish Sabadra calling on behalf of Bryan Keane. Quick question on the Payments segment. So Tom, you provided some high-level comments around...

Excuse me. We're having a really hard time understanding you.

The connection's bad.

Sorry about that. Can you hear me okay now?

We can try.

Sorry. Yes. So my question was more around the Payments segment. So Tom, you highlighted strength, broad-based strength in the Payment. But I was just wondering if you could just parse out was there anything particular strength? And then -- particular things that you're strong in that segment in this quarter? And just the sustainability of the growth in the fourth quarter and going forward? Do you get hit into some tough comps going forward?

I don't think -- I mean, I think overall, we always look at our year-to-date metrics. And our Payments segment has had about 7%, up from 4% in the prior year. And as I put in my comments, we just really had, in the quarter at least, good growth amongst all of our areas, and whether that be Card Services, our Digital Channels business, which is in our Payments segment, our Output Solutions business, our Bill Payment business from a revenue growth standpoint. We just saw really good growth and that's also our year-to-date business by a number of the businesses that are included in that segment. And as Jeff kind of highlighted around areas like bill payment, et cetera, we have some good opportunity in the future to continue to do better than what we're doing today from an opportunity to continue to grow transaction volume and revenue in areas like our Bill Payment business. So we're pleased with our progress. But we continue to believe we have very good opportunities in each of those different areas, which comprise Online Banking, Mobiliti, our Output business, our Bill Payment business and continuing really superb performance in our Card Services business with trend growth of about 11% on a year-to-date basis. So again, we expect over the next several years, that segment is going to continue to grow well, and we have some good opportunities for further growth.

No, that's great. Great. Just a quick one on the Financial segment side, the operating margin there. You highlighted that there was some impact from business mix and timing of certain expenses, but it's been trending really well for the full year. So as we think about the margins and specifically in the FI segment for the rest of the year and going forward, there are some synergy opportunities to open synergy opportunity. So how should we just think about the margins just for the fourth quarter and then going forward?

Yes, we're not going to get into fourth quarter quarterly guidance. We're comfortable with our guidance for the full year. And I think as Jeff and Mark have kind of highlighted, we have very good visibility and then continuing to grow margins in both of our operating segments through a combination of scaling of our newer solutions, continued growth in our Operational Effectiveness and really our business model, which we believe is really a differentiator as far as both the differentiator of our solutions and continuing to focus on high-quality revenue in both segments, i.e., scaling of revenue inside our businesses, both in the core account processing segment and then also in our Payments segment, our larger businesses. So that's the key to drive that growth. And we ensure that our revenue growth is coming from those high-quality sources, which allows for margin expansion and kind of free cash flow growth. And those are really the drivers of what we see going forward, and that should continue. Thank you.

Thank you, and thanks, everyone for joining us this afternoon. If you have any further questions, please feel free to contact our Investor Relations team. Have a nice day.

Thank you. That does conclude today's conference. Thank you for your participation. You may now disconnect from the audio portion.