Retailers Accuse American Express of Antitrust Breach

Retailers Accuse AmEx of Antitrust Breach as Battle Over Debit Card Cap Heats Up

This ePayment News Post was Reprinted by Permission © 2011, The Center for Public Integrity®. All Rights Reserved

Retailers in a long-running lawsuit against American Express Co. over charge card swipe fees are now accusing the card giant of violating antitrust law to keep them from suing as a class.

American Express representatives were ordered to obtain “collective action waivers” from merchants as a condition of doing business with the company, according to a complaint filed Wednesday in U.S. District Court in New York. The waivers were designed by AmEx “with the specific intention of immunizing itself against liability that it might otherwise incur under the antitrust laws in connection with the rules it imposes upon merchants,” the lawsuit says.

A class action, filed by retailers more than six years ago, accuses the company of forcing merchants to accept all AmEx credit and debit cards as a cost of doing business and seeks to free the merchants to “steer” customers to credit cards with the lowest interchange fees. That would likely mean discounts for customers who pay for purchases with lower-fee credit and debit cards.

AmEx charges merchants about 2.5 percent of the cost of any transaction, the highest interchange fee in the industry.

In a settlement with the Department of Justice last October, Visa and MasterCard agreed to free retailers from similar steering restrictions. AmEx, which was also the subject of a DOJ investigation, vowed to fight on.

Meanwhile, a broader battle over interchange fees, which the Center for Public Integrity first wrote about last September, has gained momentum as banks of all sizes lobby to convince Congress to drop or delay a provision of the Dodd-Frank financial overhaul law that would prohibit big banks from charging merchants more than 12 cents to process each debit card transaction. Banks now charge an average 44 cents, and the Federal Reserve’s proposed cap would cost them billions of dollars.

Small banks, which do not have to abide by the new regulation, say that they won’t be able to compete with the big banks unless they also slash their fees. And big banks insist that 12 cents does not cover what it costs them to process a debit card transaction.

Card companies and their network banks reaped more than $35 billion from merchant fees in 2009 alone.

A bipartisan bill was introduced earlier this month in the U.S. Senate, where Democrats hold a slim majority, to delay a debit card fee cap for two years. The legislation is backed by three Democrats — Jon Tester of Montana, Ben Nelson of Nebraska, and Tom Carper of Delaware — but it remains to be seen whether the legislation can muster the 60 votes needed to defeat any filibuster threats.

Gary Friedman, a New York lawyer who represents the small merchants in the class action against AmEx, said that the card company must drop its restriction on retailers offering discounts to customers who use other credit or debit cards. Otherwise, the government deal with Visa and MasterCard doesn’t mean much. Any merchant that accepts AmEx would be violating that company’s policy.

But after six years, the parties to the lawsuit are still fighting over whether the merchants can sue as a class, or whether, as their contracts dictate, they must arbitrate individually with the company.

The U.S. Court of Appeals for the Second Circuit recently ruled that AmEx could not force merchants to resolve lawsuits with the company individually. The next stop for the case is likely the U.S. Supreme Court.

AmEx did not respond to a Center request for comment.

Reprinted by Permission for the ePayment News Blog by Ben Hallman © 2011, The Center for Public Integrity®. All Rights Reserved.

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About The Author

Benjamin Hallman

Staff Writer

Benjamin Hallman covers business and finance for the Center. He joined in June 2010 after nearly five years as a legal affairs reporter at The American Lawyer, where he covered the business of law, white collar crime, and regulatory Washington. Hallman has reported on the accounting fraud prosecutions of HealthSouth’s Richard Scrushy and Qwest’s Joesph Nacchio; on the massive Google book search settlement; and, from Iraq, on American-led efforts to rebuild the Iraqi justice system. His story about the crash of Lehman Brothers was anthologized in The Best American Legal...

PayByPhone Approved by San Francisco Municipal Transportation Agency (SFMTA) to Pay for Parking

May 04, 2011 05:30 AM Eastern Daylight Time 

SFMTA Approves PayByPhone for On Street Parking in San Francisco

San Francisco drivers will be able to use their cell phones to pay for parking

VANCOUVER, British Columbia--(BUSINESS WIRE)--The San Francisco Municipal Transportation Agency (SFMTA) Board has approved a contract with PayByPhone (Verrus) to introduce pay-by-phone payment service across approximately 27,000 on-street parking spaces throughout San Francisco.

“Along with the SFpark initiatives, this technology will help improve the customer experience by making it more convenient to pay for parking at locations throughout San Francisco.”

When launched later this year, the service will enable drivers to use their mobile phones to pay for parking. Drivers can also choose to receive a text message reminder before their parking meters expire, add time remotely (subject to time limit restrictions) and receive parking receipts by email.

This program will be available at City meters, including those in SFpark and Port of San Francisco areas. In order to use the service, customers will first establish an account linked to a credit card, either online or by phone. Customers will then make payments by entering the unique parking location number found on each meter. The mobile web, mobile apps or an automated phone system can be used to enter the required information. The total price will include the regular meter rate plus a convenience fee of up to $0.45 per transaction for this optional service.

“The SFMTA is committed to improving parking throughout the city and this is one more tool to improve the driving and parking experience in San Francisco. To this end, we are excited to offer another parking payment option,” said Nathaniel P. Ford Sr., SFMTA’s Executive Director/CEO. “Along with the SFpark initiatives, this technology will help improve the customer experience by making it more convenient to pay for parking at locations throughout San Francisco.”

Many large cities in North America and Europe have adopted pay-by-phone parking technology. Miami, Vancouver, London and Paris are examples of places that have implemented parking payments by phone with the proven, secure system from PayByPhone.

Founded in 2001, PayByPhone (www.paybyphone.com) is the world leader in mobile phone payment solutions for parking that eliminate the need for parking meters. Deployed with over 120 cities or municipalities around the world, it is the next generation of parking technology. PayByPhone is a division of PayPoint plc (www.paypoint.com) operating through subsidiaries Verrus Mobile Technologies, Inc, Verrus UK Limited and Mobile Payment Services SAS.

Contacts

PayByPhone
Chris Morisawa, 604-642-4286 x152
Marketing Coordinator
cmorisawa@paybyphone.com
paybyphone.com

Related articles

• SFMTA Launches SFPark to Much Fanfare and Political Support (sf.streetsblog.org)
• The Right Price for Parking, San Francisco's SFpark Smart Meters (laughingsquid.com)
• San Francisco parking revolution inches closer (sfgate.com)

MasterCard Advisors Releases April 2011 Spending Pulse

May 04, 2011 09:00 AM Eastern Daylight Time 

SpendingPulse April 2011 U.S. Retail Report: Mixed Results Driven by Shifting Weather, Higher Gasoline Prices and a Late Easter Holiday

Luxury, Apparel, and e-Commerce Remain Strong While Electronics Stores Lose Ground

PURCHASE, N.Y.--(BUSINESS WIRE)--MasterCard Advisors:

SpendingPulse™
Data Source:			A macroeconomic indicator, SpendingPulse reports on national retail and services sales and is based on aggregate sales activity in the MasterCard payments network, coupled with survey-based estimates for certain other payment forms, such as cash and check. MasterCard SpendingPulse does not represent MasterCard financial performance. SpendingPulse is provided by MasterCard Advisors, the professional services arm of MasterCard Worldwide.

MasterCard Advisors SpendingPulse, a macroeconomic report tracking national retail and services sales, today provided summary results for performance of specific U.S. retail industries in April 2011. Luxury, e-Commerce and Apparel enjoyed strong growth, and the Restaurant category surpassed last month’s gains. That said, Electronics sales dipped back into negative territory. And while consumer spending in the hotel category continues to see robust year-over-year gains, airline spending retreated to under a 1% gain after several months of robust year-over-year growth.

Michael McNamara, Vice President, Research and Analysis for MasterCard Advisors SpendingPulse, notes, “Overall, retail sectors were mixed this month. Several sectors showed continued year-over-year growth, while others were flat or even negative. The shift in the Easter holiday between this year and last may have helped some of the comparisons, especially for Apparel, Groceries, Flowers, and Drug Stores. For those sectors, it might be more instructive to look at March and April combined. On the other hand, unusually stormy weather in the South and Midwest may have cut down on shopping trips, and may have worked against particular sectors such as Hardware.”

Mr. McNamara took note of the continued rise in gasoline prices. “Our experience over the past several years suggests that this can have a variety of repercussions for retail. First, we can expect consumers to make fewer shopping trips, especially on weekends, and this may contribute to an ever stronger growth for e-Commerce. Fewer miles driven also reduces demand for Auto Parts and Services. Finally, Casual Dining Restaurants can be negatively impacted.”

Here are details of some specific sectors for April 2011:

Up a notable 10.4% in April, Total U.S. Apparel sales recorded their ninth consecutive year‐over‐year gain. Some of this performance can be attributed to this year’s Easter pre‐holiday sales happening throughout April, in contrast to last year, when they took place almost entirely during March. All of Apparel’s sub-sectors recorded year-over‐year sales growth in April. Family apparel came in at 10.6%, posting the 11th straight positive year‐over‐year growth rate. Menswear weighed in at 12.4%, showing 6 straight months of positive growth. Women’s wear, up 7.4%, posted its 7th straight month of growth and the sub-category’s highest year-over‐year growth rate since May 2007. At 6.3%, Footwear also made a comeback into positive territory, following a brief dip in March.

Showing its highest single month of year-over-year growth since July 2007, and the highest dollar levels spent for any April in SpendingPulse history, U.S. e-Commerce was up 19.2%, the category’s 6th straight month of double-digit growth and 21^st straight month in positive territory. Many eCommerce sectors posted impressive growth with Footwear topping 20% and Women’swear continuing to surge, passing the 15% mark for the second straight month. Electronics online sales, at 9.1% posted their 8^th straight month in positive territory.

For the 3^rd time in the last four months Electronics and Appliances registered a decline, down 1.8% year-over-year. This is the largest March‐to‐April sales decrease since April 2006.

In its 7^th month of year-over-year gains, the SpendingPulse Luxury Index (excluding Jewelry) was up 9.6%, the sector’s largest gain since May 2010. The SpendingPulse Luxury category measures luxury sales at high-end restaurants, food stores, department stores and general apparel categories.

For more on SpendingPulse, please visit: http://www.mastercardadvisors.com/us/advisors/en/merchant_solutions/ms_spendingpulse.html

About MasterCard Advisors

MasterCard Advisors provides payments consulting, information, analytics, and customized services to financial institutions and their merchant partners worldwide. Addressing complex challenges in strategy, marketing, risk, and operations, MasterCard Advisors helps clients maximize the value of their payments businesses. As the professional services arm of MasterCard Worldwide, MasterCard Advisors is uniquely qualified to provide clients with insights and solutions that drive tangible impact and financial gain. For more information, go to www.mastercardadvisors.com.

About MasterCard Worldwide

As a leading global payments company, MasterCard Worldwide prides itself on being at the heart of commerce, helping to make life easier and more efficient for everyone, everywhere. MasterCard serves as a franchisor, processor and advisor to the payments industry, and makes commerce happen by providing a critical economic link among financial institutions, governments, businesses, merchants, and cardholders worldwide. In 2010, $2.7 trillion in gross dollar volume was generated on its products by consumers around the world. Powered by the MasterCard Worldwide Network – the fastest payment processing network in the world – MasterCard processes over 23 billion transactions each year and has the capacity to handle 160 million transactions per hour, with an average network response time of 130 milliseconds and with 99.99 percent reliability. MasterCard advances global commerce through its family of brands, including MasterCard®, Maestro®, and Cirrus®; its suite of core products such as credit, debit, and prepaid; and its innovative platforms and functionalities, such as MasterCard PayPass™ and MasterCard inControl®. MasterCard serves consumers, governments, and businesses in more than 210 countries and territories. For more information, please visit us at www.mastercard.com. Follow us on Twitter: @mastercardnews.

Contacts

Meir Kahtan Public Relations, LLC
Meir Kahtan, +1-212-575-8188
mkahtan@rcn.com
or
MasterCard Worldwide
Naya Larsson, +1-914-249-3916
naya_larsson@mastercard.com

First Data Releases Q1 Financials, up 6%

May 04, 2011 07:00 AM Eastern Daylight Time 

First Data Reports First Quarter 2011 Financial Results

• First quarter 2011 consolidated revenue of $2.5 billion, up 6%; First quarter 2011 adjusted revenue of $1.5 billion, up 2%
• Earnings growth in all three business segments
• Extended $12 billion in debt maturities to 2018 and beyond
• Generated $108 million in operating cash flow and ended the quarter with $1.9 billion in unrestricted liquidity

ATLANTA--(BUSINESS WIRE)--First Data Corporation today reported its financial results for the first quarter ended March 31, 2011. Consolidated revenue for the first quarter increased $142 million to $2.5 billion, up 6% compared to $2.4 billion a year ago. Revenue growth was primarily attributable to increases in debit network fees, merchant related services from the favorable impact of U.S. economic growth, and improved international volumes. Adjusted revenue, which excludes reimbursables, increased $29 million, or 2%, year-over-year to $1.5 billion.

“Higher volumes and good sales performance in our domestic and international merchant acquiring businesses coupled with lower expenses led to increased profitability across the board during the first quarter for First Data”

For the first quarter, the net loss attributable to First Data was $217 million, a year-over-year improvement of $23 million from $240 million. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $468 million was up 10% compared to $424 million in the first quarter of 2010, driven by growth across all three business segments.

First Data generated $108 million in operating cash flow, after interest payments of $353 million, for the quarter and finished the quarter with $1.9 billion in unrestricted liquidity—$150 million in cash available for corporate use plus $1.7 billion under the revolving credit facility.

“Higher volumes and good sales performance in our domestic and international merchant acquiring businesses coupled with lower expenses led to increased profitability across the board during the first quarter for First Data,” said Jonathan J. Judge, chief executive officer. “We continued to strengthen the capital structure by refinancing debt well ahead of maturities. This provides increased financial flexibility and the opportunity to invest for future top-line growth.”

Segment Results

Retail and Alliance Services segment revenue of $765 million increased $27.6 million, or 4%, in the first quarter of 2011 compared to $737 million in 2010. Revenue growth was driven by transaction growth of 9% and continued cross-selling of complementary products including prepaid card and point-of-sale equipment. Credit mix was stable at 72% and regional average ticket was $69.85, down 1% compared to the same quarter a year ago. Segment EBITDA was $286 million, up $36 million, or 15%, compared to 2010 as a result of revenue growth and related operating leverage, and lower expenses including reduced credit losses. Margin for the first quarter was 37%, up approximately 300 basis points compared to the same quarter a year ago. During the quarter, Retail and Alliance Services added nine referral agreements, 10 new independent sales organizations and one new revenue sharing agreement.

Financial Services segment revenue for the first quarter was $338 million, down $8.5 million, or 2%, compared to $346 million in the same quarter of 2010 as new business and growth in debit transaction volumes were offset by customer losses, pricing pressure, and a 1% decline in active card accounts on file. Debit issuer transactions were up 12% excluding the impact of the loss of Washington Mutual. Segment EBITDA was $137 million, up $4 million, or 3%, compared to $133 million in 2010, driven by lower technology and operations costs. Margin for the first quarter was 41%, up approximately 200 basis points compared to the same quarter a year ago. During the quarter, Financial Services renewed approximately 400 contracts with financial institutions.

International segment revenue for the first quarter was $415 million, up $23.6 million, or 6%, compared to $392 million in the prior year. On a constant currency basis, segment revenue was up 4%. Revenue increases were driven by growth in the merchant acquiring business, primarily due to growth in bank alliances in Europe and volumes in Argentina. The card issuing business was relatively stable, on a constant currency basis, as new business substantially offset lower volumes and lost business. The year-over-year comparison of the issuing business also improved as price compression from large contract extensions eased. Segment EBITDA was $92 million, up $14 million compared to $78 million in 2010 on higher revenue. Margin was 22%, up approximately 200 basis points compared to the same quarter of the previous year.

Recent Events

John Elkins Appointed President, First Data – International Regions

On March 16, 2011, First Data announced that John Elkins was appointed the President – International Regions, covering the company's business in Europe, the Middle East and Africa (EMEA), Asia Pacific (APAC) and Latin America (LA). Elkins has served as the company’s chief marketing and strategy officer since joining First Data in 2009. Prior to joining First Data, Elkins served as a senior advisor at McKinsey and Company. He also previously served as executive vice president and chief marketing officer for Visa International.

First Data Extends Additional Debt Maturities

In an effort to improve its overall capital structure, the company executed an amendment to its Credit Agreement which became effective on April 13, 2011, that extended the maturity date of approximately $1 billion (after a 20% reduction in commitments) of the Revolving Credit Facility to 2016 and approximately $5.0 billion of Term Loans under its senior secured facilities to 2018. In connection with the amendment and extension, on April 13, 2011, the company issued $750 million in senior secured notes with a coupon of 7.375% due in 2019 to refinance existing term loan debt and extend the company’s debt maturity profile.

First Data and SK C&C USA Initiate Landmark Trusted Service Manager Solution

On April 5, 2011, First Data and SK C&C USA, a pioneer in mobile commerce technology, announced the commercial release of a Trusted Service Manager (TSM) solution. The comprehensive First Data TSM solution is now available for enablement of Near Field Communication (NFC) devices for issuers, merchants and mobile network operators (MNOs) looking to prepare consumers for mobile payments through the most scalable, cost-effective and secure service available.

New Operations and Technology Service Center in Bratislava, Slovakia

Also on April 5, 2011, First Data announced the opening of its new operations and technology service center in Bratislava, Slovakia. The center will enable First Data to further improve its client service and operational efficiency across the EMEA region. First Data's regional technical operations in EMEA are already partially provided from Bratislava and this move continues the company's investment there, eventually bringing the total number of First Data staff in Bratislava to approximately 400 people.

Non-GAAP Measures

In certain circumstances, results have been presented that are non-GAAP (generally accepted accounting principles) measures and should be viewed in addition to, and not in lieu of, the company's reported results. Reconciliations to comparable GAAP measures are available in the accompanying schedules and in the "Investor Relations" section of the company's website atinvestor.firstdata.com.

Investor Conference Call

The company will host an investor conference call and webcast on Wednesday, May 4, 2011 at 10 a.m. EDT to review first quarter 2011 financial results. First Data Chief Financial Officer Ray Winborne, will lead the call and will be joined by CEO Jon Judge.

The call will be webcast on the “Investor Relations” section of the First Data website at investor.firstdata.com and a slide presentation will accompany the call.

To listen to the call via teleconference, dial 866-804-6923 (U.S.) or 857-350-1669 (outside the U.S.), pass code 33578587.

A replay of the call will be available through May 18, 2011, at 888-286-8010 (U.S.) or 617-801-6888 (outside the U.S.), pass code 85132052, and via webcast at investor.firstdata.com.

Please note: All statements made by First Data officers on this call are the property of First Data and subject to copyright protection. Other than the replay, First Data has not authorized, and disclaims responsibility for, any recording, replay or distribution of any transcription of this call.

Around the world, every second of every day, First Data makes payment transactions secure, fast and easy for merchants, financial institutions and their customers. First Data leverages its vast product portfolio and expertise to drive customer revenue and profitability. Whether the choice of payment is by debit or credit card, gift card, check or mobile phone, online or at the checkout counter, First Data takes every opportunity to go beyond the transaction.

Discover Releases U.S. Spending Monitor for April

May 04, 2011 07:00 AM Eastern Daylight Time 

Discover^® U.S. Spending Monitor^SM 
Consumer Confidence Volatile Throughout April but Remains at 89.4

Majority of Consumers Feel Economic Conditions Are Worsening; 
25 Percent Rate Their Personal Finances as Poor

RIVERWOODS, Ill.--(BUSINESS WIRE)--Consumer confidence in April started out unpredictable and turbulent, yet by the end of the month, remained at nearly the same levels as March. According to the Discover U.S. Spending Monitor, a daily poll of 8,200 consumers tracking economic confidence and spending intentions throughout the month, consumer sentiment remained nearly unchanged month-over-month, dropping only one-tenth of a point to 89.4 in April. That change varied greatly, however, throughout the month.

“Skyrocketing gas prices are affecting consumer attitudes about the economy and their personal finances, particularly since the job market is lagging”

From April 6 to April 20 there was a near 10-point increase in consumers who felt the economy was worsening, from 46 percent to 56 percent. During the same period, there was a rise in the number of consumers rating their personal finances as poor, from 20 to 28 percent, and a similar rise in the number of people who said their finances were getting worse, from 46 to 55 percent. The precipitous declines in confidence came as Standard & Poor’s declared concern about the nation's debt ratings, as well as continued increases in gas prices.

By the end of the month, negative sentiment had declined somewhat. On average, the number of Americans in April who felt that economic conditions are getting worse was 51 percent, nearly unchanged compared to March. Eighteen percent of consumers feel conditions are the same, down 2 points from the previous month, while 26 percent feel the economy is improving, a 1-point increase from March.

At the same time, April’s responses continue to highlight consumers’ doubts about their personal finances. Just 34 percent rate their finances as good or excellent, while 64 percent say their finances are fair or poor. When asked if their finances were getting better or worse, 49 percent feel their finances are worsening, up 1 point from March. Twenty-one percent say their finances are improving, a 1-point decrease from the previous month.

“Skyrocketing gas prices are affecting consumer attitudes about the economy and their personal finances, particularly since the job market is lagging,” said Julie Loeger, senior vice president of brand and product management for Discover. “While sentiments improved somewhat by month’s end, gas prices are still on the rise, making it less likely that consumer confidence will rebound in May.”

Gas Prices May Spoil Summer Travel Plans, Especially for Families

To better understand the effects of fuel costs on discretionary spending, the Monitor asked consumers about the impact of rising pump prices. Fifty-seven percent say fuel costs are making them change their summer vacation plans, while 68 percent of consumers say higher gas prices are forcing them to cut back on discretionary spending.

The respondents most committed to cutting back are those with children at home: 80 percent of consumers with kids are cutting back on discretionary spending and 64 percent are changing vacation plans because of high gas prices.

Majority of Consumers Spending More on Gas, Groceries; Cutting Most Discretionary Spending

The Monitor reports that consumers continue to show signs of off-setting high prices at the pump with cuts in discretionary spending. Overall, 37 percent of consumers expect to spend more in the month ahead, up 4 points since March and a total of 14 points since January. Seventeen percent of consumers expect to spend less, down 1 point from March, and 44 percent expect to spend the same, down 3 points from the previous month.

As with March, a majority of consumers, 56 percent, plan to spend more on gas, groceries and their mortgages. This is up 1 point from the previous month. Thirty-four percent of consumers expect to spend the same on household expenses, down 1 point from March, while 8 percent plan to spend less, unchanged from the previous month.

Consumers are offsetting the rising costs of household expenditures by reducing spending in the following areas:

• Entertainment: Fifty-two percent of consumers expect to spend less in the next month on going out to dinner, movies or sporting events, down 1 point from last month. Thirty-six percent expect to spend the same, up 1 point from March, while 8 percent plan to spend more, down 1 point from the previous month.
• Travel and Memberships: Forty-nine percent expect to spend less on a vacation or health club membership, up 1 point from last month. Thirty-four percent expect to spend the same, down 1 point from March, while 13 percent plan to spend more, a 1-point increase from last month.

A bright spot in consumer discretionary spending may be home improvement. Sixteen percent of consumers plan to increase spending on household improvements, a 2-point increase from the month before. Twenty-nine percent expect to spend the same, down 1 point from last month. And 49 percent of consumers plan to spend less next month on home improvement purchases, down 1 point from March.

For more Discover U.S. Spending Monitor survey data, charts and information, please visit www.discoverfinancial.com/surveys/spending.shtml.

About Discover U.S. Spending Monitor

The Discover^® U.S. Spending Monitor^SM is a monthly index of consumer spending intentions and capacity that is based on interviews with a random sample of 8,200 U.S. adults conducted at a rate of 275 per night. In addition to spending, the survey asks consumers their opinions on the U.S. economy and their personal finances. The Monitor began in May 2007 with a base index of 100. Surveys are conducted by Rasmussen Reports, an independent survey research firm (www.rasmussenreports.com).

About Discover

Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company operates the Discover card, America's cash rewards pioneer, and offers personal and student loans, online savings accounts, certificates of deposit and money market accounts through its Discover Bank subsidiary. Its payment businesses consist of Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discoverfinancial.com.

Heartland Payments Systems Releases Q1 Results, up 8.5%

Image via CrunchBase

May 04, 2011 07:30 AM Eastern Daylight Time 

Heartland Payment Systems Reports First Quarter Results

PRINCETON, N.J.--(BUSINESS WIRE)--Heartland Payment Systems, Inc. (NYSE: HPY), one of the nation’s largest payments processors, today announced first quarter GAAP net income of $7.8 million, or $0.20 per diluted share. Results are net of $303,000 (pre-tax), or less than one cent per diluted share, of processing system intrusion costs. Excluding such costs, first quarter Adjusted Net Income was $8.0 million or $0.20 per diluted share. First quarter 2010 GAAP net income was $14.2 million, or $0.36 per diluted share, which included $20.4 million (pre-tax), or $0.32 per diluted share, of insurance recoveries associated with the processing system intrusion, net of expenses related to the processing system intrusion. Excluding such net recoveries, first quarter 2010 Adjusted Net Income was $1.5 million or $0.04 per diluted share.

Highlights for the First Quarter include:

• Small and Mid-Sized merchant (SME) transaction processing volume of $15.4 billion, up 7.1% compared with the first quarter of 2010
• Transactions processed for Network Services Merchants of 747 million, up 9.0% compared with the first quarter of 2010, contributing to a 2.7% year-over-year increase in Network Services net revenue for the quarter
• Recorded quarterly net revenue of $112.7 million, up 8.5% compared with the first quarter of 2010
• An operating margin on net revenue of 12.9%, reflecting both strong net revenue growth and a 7.8% decrease in processing and servicing costs compared to the first quarter of 2010
• Same store sales up 3.2% and New Margin Installed up 13.2% relative to the comparable year ago quarter
• Stock-based compensation expense of $2.0 million, or $0.03 per share in the first quarter, compared to $0.02 in the first quarter of 2010

Robert Carr, Chairman and CEO, said, “Results for the first quarter reflect the success of our strategic initiatives to both improve the productivity of our sales organization and achieve processing efficiencies. Net revenue growth was the strongest in six quarters, with all of our card and non-card businesses registering gains in the quarter. For the second consecutive quarter, new margin installed increased on the strength of record relationship manager sales productivity. Transaction processing volumes benefitted from more stable economic conditions in the small and mid-sized merchant market and our fourth consecutive quarter of same store sales growth, while recent strategic investments and increased petroleum transactions helped Network Services achieve net revenue growth this quarter. Through ongoing platform consolidations and efficiency initiatives, we enhanced overall productivity, resulting in a 7.8% decrease in processing and servicing costs in the quarter compared to the first quarter of 2010. This is a significant strategic accomplishment that we believe is a key to enabling us to continually introduce new products while simultaneously lowering the relative cost of operations. The new year is off to a strong start. Our goal is to sustain our existing momentum while continuing to invest in the various growth opportunities we believe will create value for our shareholders.”

Net revenue in the first quarter of 2011 was up 8.5% compared to the first quarter of 2010, due primarily to strong SME card processing volumes, increased Network Services and CPOS net revenue, and continued strong growth in non-card operations, including a double-digit increase in payroll revenue. SME card processing volume for the three months ended March 31, 2011 was $15.4 billion, an increase of 7.1% compared to the three months ended March 31, 2010, as a result of another sequential quarter of positive same store sales and improved merchant installs. In the first quarter of 2011, operating income as a percentage of net revenue was 12.9% compared to 2.5% in the first quarter of 2010. The operating margin benefitted from a 7.8% year-over-year decrease in processing and servicing costs attributable to consolidations and efficiencies gained on our processing platforms, lower residual commissions from last year’s buyouts, lower merchant losses and the effect of a reduction in sales support personnel. General and administrative expenses were up 10.9% from the first quarter of 2010, but declined to 6.4% of total revenues from 6.6% in the first quarter a year-ago quarter. In the first quarter, the Company incurred approximately $303,000 in costs attributable to the processing system intrusion. All of the various expenses, accruals and recoveries related to the processing system intrusion for all periods are shown separately in the Company’s Statement of Income.

Mr. Carr continued, “In the first quarter, relationship manager productivity reached record levels, sustaining the momentum achieved in the last quarter of 2010. By developing a portfolio of Best Practices culled from throughout the organization, we are developing a wealth of tools that are proving effective in improving the efficiency of our entire sales organization. These new tools, processes and systems also provide us with the resources to more effectively expand our sales organization, generate a more immediate and meaningful contribution from new relationship managers joining the Heartland team, and meet our new business growth objectives. At the same time, we are continuing to leverage our technology to develop and introduce exciting and complementary new products. Our K-12 school services platform, SmartLink, our comprehensive petroleum and c-store networking technology, and our new FreshTxt solution, are just some of our recent innovations designed to further strengthen our merchant franchise and create value for our shareholders.”

Confirmed: Google Working on NFC Retail Services with Ingenico

Image via CrunchBase

The point-of-sale device manufacturer Ingenico has confirmed that it is working with Google on the development of near-field communication services for retailers. The company CEO Philippe Lazare told the French news agency AFP that it was working with Google to help deliver coupons that could be delivered to customers while they're shopping in retail stores. "Google wants a system where, when you enter a shop or supermarket, for example, you receive a special offer on your phone," explains Lazare. At checkout, customers would be able to touch their phones to the Ingenico POS terminal, which would be able to read the coupon and adjust the bill accordingly.

via ReadWriteWeb

Related articles

• NFC-Based Coupons Coming to Your Android Phone (readwriteweb.com)
• Google To Bring NFC-Based Coupons To Android Phones (slashgear.com)
• Google taps Ingenico for retail terminal expansion (go.theregister.com)
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Fifth Third Processing Solutions Expands Suite of Security Solutions with Voltage

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Deploying Encryption Solution for Secure Terminal Processing

CINCINNATI, SCOTTSDALE, Ariz. and CUPERTINO, Calif., May 3, 2011 /PRNewswire/ -- Fifth Third Processing Solutions, a premier full-service payment solutions provider, is pleased to announce the launch of support for Hypercom Corporation's payment software with Voltage Security's point-to-point data encryption. These powerful counter top terminal solutions help retailers and restaurants reduce the risk of data breaches by encrypting card data in the terminal and rendering it unusable until it is received and processed by Fifth Third Processing Solutions.

Available immediately, this next layer of Fifth Third Processing Solutions' growing suite of data security products uses strong data encryption technologies to protect card data during processing. Fifth Third Processing Solutions has Class A certified Hypercom's SPOS32 payment software with Voltage Security's point-to-point data encryption to help U.S. retailers and restaurants using Hypercom's Optimum T4205, T4210 and T4220 countertop terminals securely process payments.

Secure point-to-point encryption, sometimes termed end-to-end encryption, helps clients address the complex and changing needs of security best practices and guidelines.  Long known as a payments advocate for the merchant community, Fifth Third Processing Solutions is working with Voltage Security, Inc., a global leader in enterprise and payment card data protection inside and outside the cloud, and Hypercom Corporation, a global leader in payment solutions, to offer solutions focused on protecting sensitive cardholder information.

"Providing secure payment solutions to our merchant customers to help them protect card data is a key initiative for our company," said Bill Weingart, Chief Product Officer, Fifth Third Processing Solutions.  "The Hypercom Optimum terminal platform with Voltage SecureData support demonstrates our commitment to offering our clients increased security. With partners like Hypercom and Voltage Security, we are able to adapt to new security solutions and deliver encrypted processing to our valued customers."

"With Fifth Third Processing Solutions, we are bringing state-of-the-art payment systems with added security to a broad spectrum of countertop merchants throughout the United States," said David Cronin, President and Managing Director, North America, Hypercom Corporation.

"Voltage is pleased to be working with Fifth Third Processing Solutions and Hypercom to provide point-to-point security solutions to merchants," said Mark Bower, Vice President of Product Management for Voltage Security. "Merchants of all sizes can be impacted by a card data breach. Now, for the protection of sensitive cardholder data used in payment transactions, merchants can use Hypercom terminals through Fifth Third Processing Solutions' market leading processing platforms to support a safe and powerful solution for protecting card data."

About Hypercom Corporation

Global payment technology leader Hypercom Corporation delivers a full suite of high security, end-to-end electronic payment products, software solutions 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, self-service 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. To learn more visit www.hypercom.com.

About Voltage Security, Inc.

Voltage Security, Inc., an enterprise security company, is an encryption innovator and global leader in enterprise data protection for data residing both inside and outside the cloud. Voltage solutions provide cloud-scale encryption and simplified key management for protecting sensitive information wherever it is stored and processed, on-premise or in private and public clouds. Voltage solutions reduce the risks associated with theft of sensitive and private information, support privacy guidelines including PCI DSS, HITECH, U.S. Data Breach Disclosure laws and European Data Privacy directives, and uniquely provide security of data coupled with unmatched usability which results in significantly lowered total cost of ownership. To learn more about Voltage visitwww.voltage.com.

Hypercom and Optimum and Design are registered trademarks of Hypercom Corporation.

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 11.4 billion ATM and point of sale transactions and over $378 billion in debit and credit card sales volume annually. Its subsidiary, NPC, is the largest provider of payment processing services exclusively focused on the small-to-medium merchant processing market.  The Company supports over 406,000 merchant and financial institution locations and 12,000 ATMs in 46 states and 8 countries. According to the Nilson Report (March 2011), the Company is the largest PIN Debit U.S. acquirer and third largest U.S. merchant transaction acquirer ranked by general purpose transaction volume. Learn more at www.FTPSLLC.com

CONTACT:
Pete Schuddekopf
Hypercom Corporation
480.642.5383
pschuddekopf@hypercom.com

CONTACT:
Julie McHenry
Communications Insight, LLC
650.504.6655
julie@comminsight.com

CONTACT:
Lynn M. Rhoads, Senior Vice President
Communications Director
513.534.7742
lynn.rhoads@53.com
www.ftpsllc.com

SOURCE Fifth Third Processing Solutions

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