Thursday, February 18, 2010

Hypercom Completes Joint Venture Transaction with The McDonnell Group

Phoenix Managed Networks Delivers Alternative High-Speed Transaction Transport Services

SCOTTSDALE, Ariz. & RESTON, Va.--(BUSINESS WIRE)--Hypercom Corporation (NYSE: HYC) and The McDonnell Group today announced that they have completed the formation of the joint venture previously announced in the December 2009 Letter of Intent between the two companies. The transaction closed on February 17, and the newly formed joint venture, Phoenix Managed Networks, will equip payment processors, banks and retailers worldwide with highly reliable and cost-effective data communications services for transaction-based applications.

“We are providing a focused, world-class alternative for companies that are clearly seeking best-in-class solutions to their transaction transport needs, and we are doing it with a management team that is second to none. We believe this new joint venture led by Jack McDonnell will significantly enhance our ability to expand market share and deliver strong returns for Hypercom’s shareholders and business partners,” said Philippe Tartavull, Chief Executive Officer and President, Hypercom Corporation.

“We are signing up new customers, demand is substantial, and we are moving quickly to seize growth opportunities in North America, Europe, Australia and New Zealand,” said Jack McDonnell, Chief Executive Officer of Phoenix Managed Networks, Managing Member of The McDonnell Group, and former Chairman and CEO of Transaction Network Services, Inc. “We are bringing state-of-the-art, reliable and cost-effective transaction communications services to the payments industry, and we will aggressively expand the international business Hypercom established with HBNet.”

Under the joint venture arrangement, Phoenix Managed Networks has acquired and will operate Hypercom’s HBNet secure transaction transport business. Former TNS executive Matthew Mudd has joined the joint venture’s management team as President and Chief Operating Officer. Thirteen HBNET network operators and staff have transitioned to the joint venture. While financial details will remain undisclosed, The McDonnell Group has acquired a majority interest in the joint venture and will be responsible for its day-to-day operations. Hypercom remains a significant shareholder in the business.

Phoenix Managed Networks utilizes Hypercom’s HBNet network to speed the authorization and processing of electronic transactions for retail point-of-sale, financial, government, health care and other customers in dial, wireless and IP POS markets. In addition, the company will utilize Hypercom’s SmartPay gateway technology to support wireless and IP-initiated transactions.

HBNet is powered by robust, ultra high-density Hypercom technology strategically positioned within the North American Public Switching Telephone Network (PSTN) and at processor data centers. It supports all POS terminal protocols, provides uninterrupted service with no single point of failure, seamless load balancing, state-of-the-art Web-based reporting and simple all-inclusive pricing.

About The McDonnell Group

The McDonnell Group LLC is a technology-focused investment fund managed by Jack McDonnell. Companies financed by The McDonnell Group include Transaction Network Services (NYSE:TNS); PaylinX, acquired by CyberSource (Nasdaq: CYBS); ExaDigm; Ecutel Systems, acquired by Smith Micro Software (Nasdaq:SMSI); webMethods (Nasdaq:WEBM), acquired by Software AG (FSE:SOW); LifeLinkMD, acquired by Medtronic (NYSE:MDT); Core Communications, acquired by Swisscom (NYSE:SCM); and BizTelOne, acquired by NeuStar (NYSE:NSR).

About Hypercom (

Global payment technology leader Hypercom Corporation delivers a full suite of high security, end-to-end electronic payment products and services. The Company's solutions address the high security electronic transaction needs of banks and other financial institutions, processors, large scale retailers, smaller merchants, quick service restaurants, and users in the transportation, petroleum, healthcare, prepaid, unattended and many other markets. Hypercom solutions enable businesses in more than 100 countries to securely expand their revenues and profits. Hypercom is a founding member of the Secure POS Vendor Alliance (SPVA) and is the second largest provider of electronic payment solutions and services in Western Europe and third largest provider globally.

New UK Cyber Team to Target Online Banking Fraudsters is reporting that the government in the UK is forming an online banking cyber investigative unit.  Again, at the risk of sounding redundant, the "practice" of "typing" online banking login credentials into a box in a browser is the "cause" of the problem  So we need to "effectively" change the way we authenticate an online banking session.   We must stop the practice of using a browser to authenticate.  Authentication must be done "outside the browser."   It makes complete sense to use "existing cards, PINs and bank rails" to authenticate.

We at HomeATM have long stated that the trusted process used by ATM's to dispense $200 a thousand miles away from it's main branch, at 2:00 AM, can be trusted to secure the online banking session.  1. What you have (your card) and 2. what you know (your PIN)  Our PCI certified PIN Entry Device allows online banking users to swipe their card...and enter their PIN.

Online Banking Authentication Should be Done Using the Same Trusted Process to Access your Account at an ATM

New cyber team to target online banking fraudsters
February 17, 2010 - By Mark Warner

The government is setting up a new "cyber enforcement team" to tackle fraudsters who target consumers' online banking accounts.

Online banking log-on details are regularly stolen by criminals who send emails inviting individuals to register for a free item - such as an iPod - only for the recipient to download "spyware" onto their computer without realising.

This then gives fraudsters access to people's online banking log-on details...Editor's Note:  Not if we stopped typing.  No typing, no access.

Continue Reading

Fraudulent Mobile Applications will Threaten Mobile Banking Security

Security Architecture Insider

Fraudulent mobile applications will threaten mobile banking security

Nick Holland, Senior Analyst, Aite Group

The first shots are being fired in the next major battle in the war on data security -- the mobile channel.

Even at this early stage, we have seen cases of malicious applications found in mobile-application stores, some purporting to be from legitimate financial institutions, such as HSBC Holdings plc. and United Services Automobile Association (USAA). In fact, Google removed a number of malicious applications from the Android marketplace in December.

Read the full story

Many Fortune 500 Financial Firms Breached in Ongoing Hack Attack

The Register is reporting that a variant of the Zeus botnet has penetrated many Fortune 500 firms in the financial industry during an ongoing 18 month attack that continues to steal online banking credentials and other sensitive data. 

Almost 2,500 firms breached in ongoing hack attack

Zeus and Waledac unite in global botnet

Criminal hackers have penetrated the networks of almost 2,500 companies and government agencies in a coordinated campaign that began 18 months ago and continues to steal email passwords, login credentials, and other sensitive data to this day, a computer security company said.

The infections by a variant of the Zeus botnet began in late 2008 and have turned more than 74,000 PCs into remote spying platforms that have siphoned highly proprietary information out of at least 10 federal agencies and thousands of companies, according to research from NetWitness, a Herndon, Virginia-based network forensics firm.

Many of the victims are Fortune 500 firms in the financial, energy, and high technology industries. Company researchers have already reported the attacks to federal authorities and are in the process of notifying individual victims.

"The botnet is still active and still actively being managed by the organized criminal activity behind it," NetWitness CTO Tim Belcher told The Register. "Over the last month, we've seen it re-task its (victim) members half a dozen times looking for different types of information."
Continue Reading at The Register

Research and Markets: Rise of Scheme Debit - Strong Moves in the Debit Card Market

DUBLIN--(BUSINESS WIRE)--Research and Markets ( has announced the addition of the "Rise of Scheme Debit - Strong Moves in the Debit Card Market" report to their offering.

This report explores the development of the Australian scheme debit card market and speculates on how the increased penetration of debit cards over the past few years has affected the EFTPOS and credit card markets. This involves analysis and quantifying changes in consumer perceptions from surveys conducted, as well as a breakdown of purchase patterns using credit, scheme debit and EFTPOS cards.

More specifically, this report looks at penetration of debit cards versus EFTPOS cards, awareness of the distinction between scheme debit and EFTPOS cards, and the likelihood that consumers would be motivated to switch transaction account providers in order to upgrade to a debit card.

Key Topics Covered:

The adverse economic conditions
Scheme debit cards and other card payments
  • Purchase only transactions by scheme debit, EFTPOS and credit cards

Changing consumer perceptions in the Australian debit card market
  • Penetration of scheme debit vs. EFTPOS cards

  • Penetration of EFTPOS and debit cards by age

  • Benefits over EFTPOS card

  • Key reasons for obtaining a debit card

  • Appeal of a debit card rewards program

  • Debit cards as a motivation to switch transaction

For more information visit

Peoples Trust Company and CardWorks Market Hypercom Optimum T4200 in Canada

“Now Canadian merchants have access to feature-rich terminals that support the key domestic payment options and our innovative Pay in Your Currency service, providing merchants with the payment and marketing tools to drive maximum results”

“With Peoples Trust and Integrated Card Exchange, we are bringing merchants state-of-the-art payment products that support the specific business and technical requirements of the Canadian market,” said Brent Smith, Hypercom Country Manager, Canada.

Hypercom’s chip and PIN-enabled T4210 and T4220 payment terminals for the Canadian market enable full domestic processing support. Both terminals have received EMV certification from the Interac Association, Canada’s national debit card program, allowing merchants to accept the popular Interac debit cards at their establishments. The T4210 and T4220 also feature a robust suite of software applications, including support of Pay in Your Currency™. With Pay in Your Currency™, powered by payment processor Planet Payment, Canadian merchants can offer international MasterCard® or Visa® cardholders the convenience of paying for purchases in their home currency.

Hypercom's Optimum 4210

“Each of these terminals represents a comprehensive solution meeting the domestic and international payment needs of the Canadian market,” said Matt Berman, Managing Director of Integrated Card Exchange. “From the domestic perspective, Hypercom’s Optimum terminals support Interac debit cards -- a business necessity given the widespread use of this card by Canadians. The Pay in Your Currency service, powered by Planet Payment, allows merchants to better serve their international clientele by providing them the comfort and convenience of paying in their native currency.”

“Now Canadian merchants have access to feature-rich terminals that support the key domestic payment options and our innovative Pay in Your Currency service, providing merchants with the payment and marketing tools to drive maximum results,” said Philip D. Beck, Chief Executive Officer of Planet Payment. “Planet Payment and Hypercom have a successful history of providing merchants in the United States and key markets in Asia Pacific with payment solutions that help improve efficiency and profitability.”

Hypercom's high security Optimum T4200 product family for North America consists of four powerful 32-bit multi-application devices that share the same platform, user interface, and software toolkit to maximize efficiency, application portability, and offer customers a broad range of options to serve any market need.

For further information on Hypercom's Optimum products, visit

For information about Peoples Trust, visit:

For information about Planet Payment, visit:

About Hypercom (

Global payment technology leader Hypercom Corporation delivers a full suite of high security, end-to-end electronic payment products and services. The Company's solutions address the high security electronic transaction needs of banks and other financial institutions, processors, large scale retailers, smaller merchants, quick service restaurants, and users in the transportation, petroleum, healthcare, prepaid, unattended and many other markets. Hypercom solutions enable businesses in more than 100 countries to securely expand their revenues and profits. Hypercom is a founding member of the Secure POS Vendor Alliance (SPVA) and is the second largest provider of electronic payment solutions and services in Western Europe and third largest provider globally.

Canadian Crooks Compromise Credit Card Terminals


The debit cards of hundreds of people in the Canadian city of Windsor have been compromised after crooks tampered with payment terminals in fast food joints, installing Bluetooth technology into the PIN Pads and wirelessly downloading account information.

More on this story:

Transaction Wireless and Fifth Third Processing Solutions Enter Agreement to Offer Mobile Gift Card Solutions to World Class Merchants

SAN DIEGO & CINCINNATI--(BUSINESS WIRE)--Transaction Wireless (TW), a mobile infrastructure, commerce and marketing company, and Fifth Third Processing Solutions, a pioneer in providing secure electronic payments and credit, debit and gift card processing services, today announced that Fifth Third Processing Solutions will begin to offer TW’s virtual gift card solutions to its leading merchant partners, using their wGiftCard suite of products.

“Our relationship with Transaction Wireless enables our merchants to reach their valued customers on a very personal level – through their ‘always there’ mobile device,” said Donald Boeding, president, merchant services at Fifth Third Processing Solutions. “Our commitment to our processing partners is to deliver the most innovative and most effective technology available, our relationship with TW is an example of the added value we afford our clients.”

“Partnering with such a key player in the financial services industry gives us great exposure to millions of potential users of the various wGiftCard solutions,” said Bruce Springer, president and CEO, Transaction Wireless. “Our easy-to-use technology gives Fifth Third’s merchants a new, more cost-effective way of handling their multi-billion dollar gift card business – whether they’re delivering virtual cards to the end-user’s mobile device or email address.”

About wGiftCard

An alternative to traditional plastic cards, wGiftCard by Transaction Wireless gives retailers coveted real estate on the ubiquitous mobile screen or email inbox for the delivery and redemption of gift cards, coupled with one-to-one marketing programs. The wGiftCard platform provides a simple, easy solution for virtual gift card activations, balance inquiries, gifting among consumers, replacing stolen or lost cards, redemption, reloading cards, storing, tracking and monitoring. Transaction Wireless’ wGiftCard suite includes both turn-key and fully customized solutions for gift cards and more via virtually any mobile phone or PC. wGiftCard and accompanying services can be used by virtually any industry. More information can be found at or by emailing

About Transaction Wireless

Transaction Wireless (TW) is a mobile commerce, payment and one-to-one relationship marketing company enabling a unique link between consumers, retailers and brands via any PC or mobile device leveraging TW's proprietary technologies. With unparalleled solutions, Transaction Wireless’ product portfolio includes wGiftCard, a suite of solutions for the next generation of gift cards and stored value programs delivered to any mobile phone or email; wConnect, a multimedia mobile messaging platform that can extend any brands’ marketing programs to the mobile phone or PC; and wCharge, a small merchant mobile POS credit card terminal. The Company is headquartered in San Diego, California. More information can be found at

About Fifth Third Processing Solutions

Fifth Third Processing Solutions, LLC delivers innovative payment transaction processing and acceptance solutions to create and support complex payment strategies for merchants, businesses, and financial institutions around the world. A pioneer in card payment acceptance in the early 1970s, Fifth Third Processing Solutions is headquartered in Cincinnati, Ohio and is a joint venture with Advent International and Fifth Third Bank, a subsidiary of Fifth Third Bancorp (FITB).

As a premier full service payment solutions provider, the Company provides servicing solutions and product engineering for financial institutions’ and retailers’ credit card, debit card, merchant and private label programs processing over 33.3 billion ATM and point of sale transactions and over $315.5 billion in debit and credit card sales volume annually. The Company supports over 180,000 merchant and financial institution locations and 11,000 ATMs in 44 states and 11 countries. According to the Nilson Report (March 2009), the Company is the fourth largest U.S. merchant purchase transaction acquirer. Learn more at

Note: Transaction Wireless will be attending the Prepaid Expo Feb 22-24 in Las Vegas. Please contact Tom Niedbalski at to schedule a demo.


Heartland Payment Systems Reports Fourth Quarter Results

http://www.heartlandpaymentsystems.comPRINCETON, N.J.--(BUSINESS WIRE)--Heartland Payment Systems, Inc. (NYSE: HPY), one of the nation’s largest payments processors, today announced a quarterly GAAP net loss of $9.6 million, or ($0.26) per share for the three months ended December 31, 2009 compared to net income of $8.0 million, or $0.21 per fully diluted share, for the same period of 2008. Results for the quarter are after $23.7 million (pre-tax), or $0.42 per share, of various expenses, accruals and reserves, all of which are attributable to the processing system intrusion, including charges related to settlement offers made by the Company in attempts to resolve certain processing system intrusion related claims and settlements of certain claims deemed to be likely to be agreed upon in the near future based upon discussions between the Company and the claimants. Excluding these expenses, accruals and reserves, Adjusted Net Income and Earnings per Share were $5.9 million and $0.16, respectively. Fourth quarter Adjusted Net Income and Earnings per Share are non-GAAP measures that exclude certain items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”

“Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure”
Highlights for the fourth quarter of 2009 include:

  • Small and Mid-Sized merchant (SME) transaction processing volume of $14.8 billion, up 5.0% from a year ago

  • Quarterly Net Revenue of $105.1 million, also up 5.0% from a year ago

  • 93.1% of new merchants installed were on HPS Exchange compared to 91% in the fourth quarter of 2008

  • Operating margin on net revenue of 10.0% as a result of continued investment in the Company’s growth platforms, compared to an operating margin of 13.9% in the fourth quarter of 2008

  • Same store sales, while down 5.2% for the fourth quarter, reflect a 340 basis point sequential improvement from the third quarter of 2009 and the second consecutive quarterly improvement

  • SFAS 123R stock compensation expense of $1.7 million, or $0.03 per share

Robert Carr, Chairman and CEO, said, “Adjusted earnings for the quarter, which is net of $0.03 per share of stock compensation expense, was consistent with our guidance. In the fourth quarter, results reflected encouraging progress on two important measures, year-over-year growth in SME transaction processing volume and same store sales, both of which also improved on a sequential basis from the third quarter. These are modest, but encouraging, signs our small and mid-sized merchants may be starting to recover from the most challenging year since Heartland’s formation. During the quarter, we also made progress on resolving some of the claims relating to the processing system intrusion, which should free an increasing proportion of our resources for more productive pursuits heading into the new year. The sense of both an underlying shift in market direction as well as the increased focus on our growth opportunities we believe provide a solid foundation from which to pursue our long term objectives in 2010. We are proud of the many accomplishments achieved over the past year by our dedicated employees who have battled very difficult conditions, and are thankful for the loyal merchants who continue to value Heartland’s “Fair Deal.”

Net revenues in the fourth quarter were $105.1 million, an increase of 5.0% compared to $100.1 million in the fourth quarter of 2008, with gross revenues up in all major categories: processing, payroll and equipment-related. Card processing volume for the three months ended December 31, 2009 increased 5.0% to $14.8 billion compared to the fourth quarter of 2008. Though same store sales were down 5.2% in the quarter, they improved by 340 basis points sequentially from the third quarter of 2009 and have now improved for two sequential quarters, in part due to weak year ago comparables. New margin installed was down 23.3% in the fourth quarter as economic conditions continue to force merchants to postpone an evaluation of their processing solution. The operating margin on net revenue was 10.0% in the fourth quarter, primarily due to an increase in general and administrative expenses, especially stock compensation, legal costs, and salary, and fringe benefits. The various expenses, accruals, and reserves incurred in the fourth quarter, all of which are attributable to the processing systems intrusion, were $23.7 million pre-tax, or $0.42 per share. The majority of these charges relate to settlement offers made by the Company in attempts to resolve certain of the claims asserted against it relating to the processing system intrusion, and settlement of certain claims asserted against the Company that are deemed likely to be agreed upon in the near term based upon discussions between the Company and the claimants. The charge also includes significant legal fees. These various expense and accruals are shown separately in the Company’s Statement of Operations.

Mr. Carr continued, “During the economic slowdown we have continued to invest in developing a broader portfolio of products and services, including our industry-leading end-to-end encryption technology, to strengthen our value proposition. We are also launching innovative new sales and marketing strategies, such as industry-focused saturation sales efforts, to leverage our proprietary sales force and reinvigorate the growth in our relationship manager team. Through these investments, Heartland is now more aggressively in the market with a broader, more comprehensive value proposition for a wider variety of merchants. We expect this will enable us to gain share this year, as well as to experience significant growth as the economy recovers and more merchants seek a competitive solution.”


For the full year of 2009, GAAP net loss was ($51.8) million or ($1.38) per diluted share. Net revenues for 2009 were $420.2 million up 9.5% compared to 2008. Excluding various expenses, accruals and reserves, all of which are attributable to the processing system intrusion, Adjusted Net Income and Earnings per Share for fiscal 2009 were $29.3 million or $0.78 per share, compared to GAAP earnings of $41.9 million, or $1.08 per share in 2008. Stock compensation expenses have reduced earnings by $4.5 million or $0.07 per share in 2009 compared to $1.5 million or approximately $0.02 per share for 2008.

Use of Non-GAAP Financial Measures

To supplement its consolidated financial statements presented in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company provides additional measures of it operating results, net income and earnings per share, which exclude certain costs and expenses related to the processing system intrusion. The Company believes that these non-GAAP financial measures are appropriate to enhance understanding of its historical performance as well as prospects for its future performance.

This press release contains non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Pursuant to Regulation G, a reconciliation of these non-GAAP financial measures with the comparable financial measures calculated in accordance with GAAP for the respective periods ended December 31, 2009 follows:

(In thousands, except per share):



December 31,




December 31,

Net income (loss) attributable to Heartland
Non-GAAP - Adjusted net income attributable to Heartland $ 5,924   $ 29,256  
Less adjustments:
Provision for processing system intrusion 23,651 128,943
Income tax benefit of provision for processing system
Intrusion   (8,097 )   (47,891 )
After-tax provision for processing system intrusion   15,554     81,052  
GAAP - Net income (loss) attributable to Heartland $ (9,630 ) $ (51,796 )
Earnings(loss) per share
Non-GAAP - Adjusted net income per share $ 0.16 $ 0.78
Less: provision for processing system intrusion $ (0.42 ) $ (2.16 )
GAAP - Net income (loss) per hare $ (0.26 ) $ (1.38 )
Shares used in computing GAAP net income (loss) per share 37,480 37,483
Please see “Reconciliation of Non-GAAP Financial Measures and Regulation G Disclosure” below for additional detail.


Current economic conditions are likely to continue to influence same store sales growth and new merchant signings in 2010. For the full year 2010, we expect net revenue (total revenues less interchange, fees, dues and assessments) to grow by 10 – 13%, to between $460 and $475 million. For full year 2010, we expect fully diluted EPS to be between $0.95 and $1.00, excluding $0.09 per share of 123R stock compensation expense. The Company’s guidance for 2010 does not include any estimates for potential losses, costs and expenses arising from the previously announced processing system intrusion, including exposure to credit and debit card companies and banks, exposure to various legal proceedings that are pending, or may arise, and related fees and expenses, and other potential liabilities, costs and expenses, including the interest expense on debt incurred to finance any settlements. Except to the extent previously accrued, neither the costs nor the potential liability are estimable at this point, and further the liability is not currently deemed probable.


The Company also announced the Board of Directors today declared a quarterly dividend of $0.01 per common share, which is payable March 15, 2010 to shareholders of record on March 5, 2010.

Conference Call:

Heartland Payment Systems, Inc. will host a conference call on February 18, 2010 at 8:30 a.m. Eastern Time to discuss financial results and business highlights. Heartland Payment Systems invites all interested parties to listen to its conference call, broadcast through a webcast on the Company’s website. To access the call, please visit the Investor Relations portion of the Company’s website at: The conference call may be accessed by calling 866-431-2040. Please provide the operator with PIN number 9173947.

The webcast will be archived on the Company’s website within two hours of the live call.

About Heartland Payment Systems:

Heartland Payment Systems, Inc. (NYSE: HPY), the 5th largest payments processor in the United States, delivers credit/debit/prepaid card processing, payroll, check management and payments solutions to more than 250,000 business locations nationwide. Heartland is the founding supporter of The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair credit and debit card processing practices. For more information, please visit,, and

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