Heartland Seeks Banks for ‘Holistic’ Card for Small-Ticket Market

Heartland Payment Systems Inc. is working on a technology platform that would support multiple accounting and transaction functions on a single card, the processor's chairman and chief executive revealed in a presentation last week. Speaking to an audience of merchants, processors, and bankers interested in converting small-value cash payments to electronic processing, Robert O. Carr said the new card would fill what he sees as a yawning gap in current contactless and other card-based electronic payment solutions by integrating into a single product such functions as general ledger, deposit reconciliation, payroll, commission management, and loyalty accounting. Speaking to Digital Transactions News, Carr said Heartland is seeking relationships with banks to issue the card. Carr also decried flat fees associated with credit card interchange for small-value transactions and predicted the bank card networks will drop them for such payments. “That 10-cent [flat fee] on a 75-cent Coke is doing nothing more than forcing us to find alternative solutions,” Carr said during his speech, delivered in New York at a micropayments conference organized by Peppercoin Inc. “Mark my words, [Visa USA and MasterCard Worldwide] are going to change that policy. They will not be charging 10 cents on a 75-cent transaction three years from now.” For most transactions, card interchange fees include both a percentage of the sale and a flat charge. The flat-fee component has been a hurdle for processors and merchants looking to convert small-ticket cash payments to cards. Speaking more broadly, Carr called for a “holistic” solution to a problem commonly faced by such small-ticket merchants as vending-machine operators. These merchants balk at the costs of installing readers for contactless payments on top of flat fees for acceptance, Carr said. Meanwhile, the electronic payment products available to them do little or nothing to help them automate accounting functions such as sales commissions and reconciliation of acceptance fees. “What a complete pain in the neck it is for the operator to get a Visa or MasterCard, American Express, or Discover deposit with fees taken out,” he said. Charging that the electronic-transactions business “has been plagued by inadequate partial solutions,” Carr said such merchants need a card combining payments processing with critical accounting functions. “Do all those things on one card,” he advised. “We wanted to do that four years ago, but the banks wouldn't talk to us. Now, we're big enough that they'll talk to us.” Princeton, N.J.-based Heartland, which went public last year with a hugely successful offering, has become one of only six companies processing 1 billion or more transactions annually. Carr's goal for Heartland is to reach 2 billion transactions within the next three to five years. The product under development may be Heartland's most ambitious effort in small-ticket payments, but it is not it's first. Last week, the company announced it is offering micropayments processing from Peppercoin to its 130,000 merchants. Cheddar's Pizza, a pizza parlor in Cambridge, Mass., is the first merchant on the system. In January, Heartland invested in Parcxmart Technologies Inc., a company that processes payments at parking meters on cards that can also be used at local coffee shops. The next month, it bought Debitek, a company that processes stored value transactions on college and corporate campuses (Digital Transactions News, Feb. 13).