Vantiv Disputes Researcher’s Report About Its Merchant Pricing

Vantiv Inc. took the unusual step this week of filing a document with the Securities and Exchange Commission to dispute a research firm’s report about its merchant pricing. The payment processor says the report “claims Vantiv deceives merchants by marking up interchange fees.”

The report about Vantiv’s allegedly high and un-transparent pricing was published by The Capitol Forum, which describes itself as “an investigative news and legal analysis company dedicated to informing policymakers, investors, and industry stakeholders on how policy affects market competition.” Washington, D.C.-based Capitol Forum sells its reports on monthly, quarterly, or annual subscription plans.

Vantiv’s stock closed down 2.5% on Monday after trading even lower earlier in the day after the report came out. It’s not certain that The Capitol Forum report was the entire cause, but a headline from the SeekingAlpha financial news service said “Vantiv down 3% as Capital [sic] Forum takes aim.”

Digital Transactions News has not seen the report. An executive at The Capitol Forum declined to provide it, nor would he comment about the Vantiv filing, which Vantiv filed Monday.

A spokesperson for suburban Cincinnati-based Vantiv also declined to comment beyond the so-called 8-K filing. The document says “Vantiv rejects the conclusions and methodology asserted in the article. Vantiv does not mark up interchange fees; the company properly discloses the calculation of its fees to merchants, and generally charges merchants less than the industry.” The filing also says Vantiv clearly delineates on merchant statements base processing fees, risk-based transaction costs, and any surcharges.

Vantiv says independent merchant-acquiring consulting firm The Strawhecker Group (TSG) analyzed its pricing for small and mid-sized merchants and compared it with industry averages.

Citing TSG data, Vantiv said its effective rate, which it describes as total of all charges and fees billed to a merchant divided by the merchant’s total sales volume in a billing period, was 16 basis points (0.16%) lower than the overall U.S. average as of March. Vantiv also says its effective rate was lower than the U.S. average in five of six major industry categories: retail, personal services, health care, bars and restaurants, and business-to-business merchants. Only in business services was Vantiv’s effective rate higher than average, the company says.

“As a result of our competitive pricing, Vantiv’s merchant attrition rates are below industry average,” the filing says, citing based on TSG data.

“Given the ease with which merchants can change payment processors, were Vantiv to be out of step with the industry as claimed in the article, we would likely experience high client attrition rates,” the document says. “In addition, contract-termination fees are standard practice in the payment-processing industry, as well as many others, and competitors are often willing to reimburse potential clients for termination fees if they agree to switch.”

Omaha, Neb.-based TSG declined to comment.

Vantiv, the fourth-largest U.S. merchant acquirer by volume, according to TSG, earlier this month announced a pending deal to buy the big merchant acquirer Worldpay Group plc for $9.9 billion.