IMGCAP(1)]
This article appears in the Nov. 12, 2009, edition of ISO&Agent Weekly.
VeriFone Holdings Inc. intends to offer direct support to merchant clients of Heartland Payment Systems Inc. that are using its payment terminals, over Heartland's objections.
Heartland and VeriFone have been at odds since September, when the former partners sued each other over disagreements about the development of a Heartland-branded payment terminal that would use advanced encryption technology.
Princeton, N.J.-based Heartland calls the device an E3 terminal, short for "end-to-end encryption."
San Jose, Calif.-based VeriFone, which says it plans to terminate its support agreement with Heartland on Dec. 31, last week asked Heartland's clients to register to receive service and support directly from the terminal maker.
On Friday, Heartland asked a judge for a temporary restraining order to block VeriFone from doing so and to stop it from issuing public statements discussing Heartland and the ongoing dispute.
On Monday, a judge with U.S. District Court for the District of New Jersey denied both requests.
On Wednesday, the same judge will hear Heartland's request for a preliminary injunction asking for the same restrictions on Dec. 7, Heartland says.
In its complaint, Heartland said there are approximately 80,000 VeriFone devices in use on its network.
Competing Statements
Heartland can take care of its merchant clients, says Robert. O Carr, the processor's CEO and chairman. "We have lots of parts and supplies for the"
VeriFone terminals, Carr says. "We can support them indefinitely."
The 250,000 merchant locations using Heartland will by shifting to advanced payment terminals using encryption technology starting next year, but the transition will be voluntary, says Carr. "We are not going to force the merchants to upgrade," he says. "If they want to keep their VeriFone terminals, they will be able to do that."
Each company issued a statement trying to persuade merchants to use its terminal-support services after Dec. 31.
Heartland Tuesday instructed its merchants not to sign up for VeriFone's offer of technical support.
The processor claims VeriFone plans to assess a fee from each merchant using the terminal the two companies had been working on together. Heartland "is not willing to pay VeriFone a new recurring junk fee for E3 and pass it on to our customers or consumers," according to the company.
Claims made by VeriFone that Heartland would not able to support its merchants' VeriFone devices are "false," according to Heartland. "These claims have included out-of-context quotations from our litigation against VeriFone and irresponsible allegations about using VeriFone's technology to bring a more secure payments infrastructure to the United States."
VeriFone's offer of support post-Dec. 31 has always been labeled as "free," says VeriFone CEO Douglas G. Bergeron. He would not comment on the alleged fee for Heartland's new terminal.
Heartland also Tuesday issued a new set of financial results, updating the third-quarter results it reported last week. The company said it had "engaged in settlement discussions that resulted in an increase in settlement offers" related to the major breach it disclosed in January.
Heartland initially reported a charge of $35.6 million for the quarter to cover the breach, but it has now doubled the charge to $73.3 million. As a result, its net loss for the period increased to $37.1 million from $13.6 million.
