Magazine article American Banker

Heartland Obtains Discover Pact, Has A Merchant Focus

Magazine article American Banker

Heartland Obtains Discover Pact, Has A Merchant Focus

Article excerpt

The transaction processor Heartland Payment Systems Inc. announced Thursday that it has landed a contract to provide merchant acquiring services for the card company Discover Financial Services.

Robert O. Carr, the chairman and chief executive officer of the Princeton, N.J., processor, said it expects to be ready to offer Discover to clients this fall.

"We will offer Discover acceptance to our merchants on exactly the same terms as with Visa and MasterCard," Mr. Carr said on a conference call with analysts after the company reported earnings that exceeded analysts' expectations.

Heartland now has acquiring agreements with all four major U.S. card companies. It signed one with American Express Co. in January and has provided merchant acquiring services to Visa Inc. and MasterCard Inc. since its founding in 2000.

Heartland expects to begin offering American Express at roughly the same time it introduces Discover.

A spokesman for Discover of Riverwoods, Ill., did not respond Thursday to a request for comment.

Heartland plans to grow by gaining merchants, Mr. Carr said, because it is seeing "very soft same-store sales growth" as the economy struggles.

"We think that we are in a consumer recession, regardless of what the economists say about the overall economy, and there is no sign of any pickup," he said.

Heartland said it gained 15,061 merchants during the first quarter, raising its total to nearly 166,000, including card processing accounts and payroll processing customers. The company said its client rolls grew 15.1% from a year earlier. The number of its card merchant relationships rose by more than 14%, and the number of its payroll customers jumped by nearly 40%.

The company, which has focused on small customers, has begun targeting large ones, Mr. Carr said. "We've had some success, not the megamerchants, but we are moving upstream a little bit. …

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