Heartland Payment Systems Inc. charges in a lawsuit that the tying of a Micros Systems Inc. point of sale system to a processing gateway run by a Chase Paymentech Solutions LLC subsidiary is anticompetitive and inflating card processing costs.
Micros "forces" users of its system for restaurants to use the Chase Paymentech subsidiary, Merchant Link LLC, "as the exclusive gateway for credit and debit card processing," Heartland said in a press release Tuesday.
In its complaint, filed Monday in federal district court in New Jersey, the payment processor said Merchant Link charges an "exorbitant toll" for an activity that provides "no benefit beyond access to restaurants" with the system.
Heartland, of Princeton, N.J., said that it "continues to provide virtually all the service and support the merchant might require" while using Micros, which the lawsuit calls "the unparalleled leader in selling POS systems in the restaurant industry."
Heartland alleges that Merchant Link, as a gatekeeper for the system, assesses a higher fee on processors than it would otherwise charge to process transactions, and that Chase Paymentech, as the owner of Merchant Link, can "always undercut its competitors" doing business on the Micros platform. (Chase Paymentech, of Dallas, is a merchant acquiring joint venture between First Data Corp. and JPMorgan Chase & Co.)
However, Peter J. Rogers Jr., an executive vice president with Micros, of Columbia, Md., said Merchant Link treats "all the different processors the same in terms of pricing by contract."
Merchant Link provides processing and help-desk support under the arrangement, handling "a very specialized" part of what the application provides, he said.
With the Merchant Link arrangement, Mr. Rogers said, "I have centralized support when I update software. … I only have to write to one spec provided by Merchant Link. They handle all the connectivity with the various processors."
"We will contest" the suit, Mr. Rogers said. "We've had this program in effect for 15 years plus. It provides the ability for us to support our customers 7 by 24 with rapid response where there are network issues or support calls."
Robert O. Carr, Heartland's chief executive, said in a press release, "Merchant Link adds no unique value to the transaction clearing process. … Paymentech makes it nearly impossible for many restaurant owners to use any other card processor."
However, Mr. Rogers said, "We believe that our solution offers customers a multitude of acquiring opportunities."
Mr. Carr said in an interview that Heartland has been "trying to convince Merchant Link and Micros that their practices were unethical and against the law" for several years but decided to sue after receiving a letter from Micros this year dismissing Heartland's concerns. The sort of practice that is the subject of the complaint is "unique" in the industry "to my knowledge," he said.
Gary J. Malone, a partner at Constantine Cannon LLP, said private lawsuits and government investigations into tying practices seem to have become more frequent, perhaps due to more companies packaging offerings. "There's a lot of play there now," he said.
A spokeswoman said Chase Paymentech was still "working to understand the … scope of this media release that Heartland has put out" but would likely issue a response late Tuesday.
