Profile: Heartland Payment Systems Inc (HPY)
30 Jan 2015
Heartland Payment Systems, Inc. , incorporated on June 16, 2000, provides bankcard payment processing services to merchants in the United States. This involves facilitating the exchange of information and funds between merchants and cardholders financial institutions, providing end-to-end electronic payment processing services to merchants, including merchant set-up and training, transaction authorization and electronic draft capture, clearing and settlement, merchant accounting, merchant assistance and support and risk management. Its card-accepting customers primarily fall into two categories: its core small and mid-sized merchants (referred to as Small and Midsized Enterprises, or SME merchants) and Network Services merchants, predominately petroleum industry merchants of all sizes (referred to as Network Services Merchants). It provides additional services to SME merchants, such as full-service payroll processing and related tax filing services, marketing solutions including loyalty and gift cards, and it sells and rents point-of-sale devices. In April 2014, the Company acquired MCS Software. In August 2014, it acquired Leaf. In September 2014, Heartland Payment Systems Inc completes acquisition of TouchNet Information Systems, Inc.
It also offer K to 12 school nutrition and point-of-sale solutions and payment solutions through Heartland School Solutions, open- and closed-loop payment solutions and higher education loan services to colleges and universities through Campus Solutions, and prepaid and stored-value card solutions through Micropayments. On December 31, 2012, it acquired Ovation Payroll, Inc. (Ovation). on June 29, 2012 it acquired the K to 12 school solutions business of Lunch Byte Systems, Inc. ( Nutrikids).
Bankcard Payment Processing
As of December 31, 2012, it provided bankcard payment processing services to 169,994 active SME bankcard merchants located across the United States. This compares to 171,801 active SME bankcard merchants at December 31, 2011. At December 31, 2012, it provided bankcard payment processing services to 396 Network Services Merchants with approximately 47,064 locations. It generally benefit from consumers' increasing use of bankcards in place of cash and checks, and sales growth (if any) experienced by its retained SME merchants. Its SME revenue is from gross processing fees, which are primarily a combination of a percentage of the dollar amount of each card transaction it processes plus a flat fee per transaction. It makes mandatory payments of interchange fees to card issuing banks through card networks and dues, assessments and transaction authorization fees to Visa, MasterCard and Discover, and it retains the remainder as net revenue.
Its bankcard processing revenue from its Network Services Merchants is also recurring in nature. It typically enters into five-year contracts with its national merchants and three year contracts with its other merchants. However, in contrast to SME merchants, its processing revenues from Network Services Merchants generally consist of a flat fee per transaction and thus revenues are driven primarily by the number of transactions it processes (whether settled, or only authorized), not bankcard processing volume.
It has developed a number of payment processing systems to increase its operating efficiencies and distributes its processing and merchant data to its three main constituencies: merchant base, sales force and customer service staff. It provides authorization and data capture services to its SME merchants through its own front-end processing system, which it calls HPS Exchange. It provides clearing, settlement and merchant accounting services through its own internally developed back-end processing system, which it calls Passport. Its control over its front-end and back-end systems enables them to more effectively customize these services to the needs of its Relationship Managers and merchants, and to minimize its processing costs. As of December 31, 2012, its internally developed systems are providing substantially all aspects of a merchant's processing needs for its SME merchants and providing all aspects of its Network Services Merchants' processing needs.
It launched its End-to-End Encryption solution (known as E3) in May 2010 to protect sensitive card data as it moves through the merchant's network and its platforms, resulting in a more secure payments network. Over 45,000 E3-enabled terminals have been deployed to small and mid-sized business owners across the country to protect their businesses and their customers.
Payroll Processing Services
It provides a full-service nationwide payroll processing service, including check printing, direct deposit, related federal, state and local tax deposits, accounting documentation and human resources information. It developed a comprehensive payroll management system, which it refers to as PlusOne Payroll, that streamlines all aspects of the payroll process to enable time and cost savings.
Heartland School Solutions
It provides school nutrition, point-of-sale solutions, and associated payment solutions including online prepayment, to K to 12 schools throughout the United States. It offers back office management software, hardware, annual technical support, and training to its customer school districts. As of December 31, 2012, its Heartland School Solutions business provided services to over 29,000 schools.
It provides open- and closed-loop payment solutions and higher education loan services to colleges and universities throughout the United States and Canada. Besides payment processing, its Campus Card solution enables personal identification, door access, cashless vending transactions, cashless laundry, meal plans and cashless printing at campus facilities. Its loan services include student loan payment processing, delinquency and default services, refund management, tuition payment plans, electronic billing and payment, tax document services, and business outsourcing. As of December 31, 2012, its Campus Solutions business served more than 2,000 colleges and universities.
The Company competes with First Data Corporation, Global Payments Inc., Vantiv, Inc., Chase Paymentech Solutions, Bank of America Merchant Services, Wells Fargo and Elavon, Inc.
Heartland Payment Systems Inc
300 Carnegie Center Blvd., Suite
PRINCETON NJ 08540