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George R. Jensen Jr., founder and chief executive of USA Technologies Inc. (USAT), has resigned under a cloud, casting a pall of uncertainty over the provider of wireless payment hardware and networking services for vending machines just as new interchange schedules affecting small debit card transactions threaten to crimp its revenues.
The company reported the resignation on Monday after disclosing last week that it had suspended Jensen Oct. 5. In an Oct. 12 regulatory filing, the company said the Audit Committee of its board of directors was investigating “postings by Mr. Jensen concerning the company made on an Internet message board.”
The filing gave no details about the postings, though it did say the company believes Jensen’s “actions do not impact or have an effect on the historical financial results or audited financial statements of the company.” The filing said the investigation was continuing and that the company anticipated Jensen would resign.
A filing Monday announcing the resignation also gives no details about the postings. A USAT spokesperson did not return a call from Digital Transactions News, and Jensen could not be reached for comment.
Malvern, Pa.-based USAT last week said it had appointed Stephen P. Herbert as interim chief executive. Herbert has been president and chief operating officer since August 1999.
The leadership turmoil comes in the same month that Federal Reserve debit card interchange price controls implementing the Durbin Amendment to the Dodd-Frank Act took effect. USA Technologies recently reported that new Visa Inc. and MasterCard Inc. interchange schedules reflecting the Fed’s debit transaction cap of 21 cents plus 0.05% of the sale could more than triple its acceptance costs on regulated debit cards, those from issuers with more than $10 billion in assets.
The company, whose average ticket is $1.67, operates a network of vending machines and other unattended locations with 119,000 connections for 1,000-plus clients that accept credit and debit card payments wirelessly through its ePort card readers and related technology.
“Unattended is under pressure because of Durbin,” George Peabody, director of the Emerging Technologies Advisory Service at Maynard, Mass.-based Mercator Advisory Group Inc., says by e-mail. “As MasterCard and Visa goose the costs for debit micropayments at the POS it makes the unattended acceptance argument harder, which has to make things tough for USA Tech. Durbin’s been about the law of unintended consequences from day one. This is just one of them.” Peabody says he has no knowledge about Jensen’s departure and wouldn’t comment about it.
USAT’s Monday filing says Jensen will get a lump-sum payment of $365,000, equal to one year’s base pre-tax salary, and other compensation under a separation agreement. Jensen was a film producer before founding USA Technologies 19 years ago.
