Improvement in the economy is helping Heartland Payment Systems Inc., which reported Wednesday that higher spending had led to a small jump in its fourth-quarter revenue.
The Princeton, N.J., company, which processes card transactions for merchants, said it processed $18.8 billion in transactions in the quarter ended Dec. 31, up 8.5% from a year earlier.
The higher volume helped Heartland's net revenue grow to $110.5 million, up 5.1% from a year earlier, though analysts had expected net revenue of $111.7 million.
Heartland's net revenue excludes interchange, dues, assessments and fees, which it collects but passes along to issuing banks and payment networks. Its total revenue rose 14% in the fourth quarter, to $478.2 million.
"Our major revenue categories — payment processing, payroll and equipment sales — all registered double-digit growth," Bob Carr, Heartland's chairman and chief executive, said on a conference call.
The Census Bureau had reported Tuesday that retail and food service sales rose 7.8% year over year in January, to $381.6 billion, based on advance estimates.
Heartland reported net income of $6.7 million for the quarter, compared with a net loss of $9.6 million a year earlier.
For the full year, Heartland said, it expects net revenue to grow 7% to 9% and diluted earnings per share to be 92 to 96 cents. The earnings estimates do not include potential costs from a security breach the company disclosed in January 2009.
Carr said he expects the company to benefit from the Federal Reserve Board's proposal to cap debit card interchange.
The last time a major reduction in debit interchange occurred, after a 2003 settlement between several large merchants, including Wal-Mart Stores Inc., and Visa Inc. and MasterCard Inc., Heartland saw a 40% increase in market share because it passed along the lower prices to clients, Carr said.
However, he said, any gain from adoption of the Fed's rules this year is "not going to be anywhere in that range."