Heartland Payment Systems Inc. is prepared to pass along what it calls “Durbin Dollars” to its merchant clients.
The Princeton, N.J.-based payments processor has reiterated its plan to pass along reductions in debit card interchange fees mandated by the Durbin amendment to the Dodd-Frank Act. The company calls this its Durbin Dollars initiative.
“We are the company that is going to send every single dollar that was mandated in the Durbin legislation to the place it was intended, to our merchants’ bank accounts,” Bob Carr, Heartland’s chairman and chief executive, said during an earnings conference call July 28.
His comments mirrored those he said in February, when he noted during a fourth-quarter conference call with analysts that the last time a major reduction in debit interchange occurred following a class-action settlement in a lawsuit led by Wal-Mart Stores Inc. against Visa Inc. and MasterCard Worldwide in 2003, Heartland saw a 40% increase in market share because it passed along the price decrease to its clients (
Analysts have said Heartland could gain market share as a result of the new debit card rules, which the Federal Reserve Board finalized in late June, because it uses a pricing model in which it passes along changes in interchange costs directly to merchants. Some acquirers charge merchants a marked-up cost.
“Unlike other acquirers, which generally pursue ‘bait-and-switch’ pricing, Heartland’s transparent interchange-plus model, coupled with its increasingly efficient captive sales organization, should fuel” revenue growth, Andrew Jeffrey, an analyst with SunTrust Robinson Humphrey, wrote in a research report published in May.
Heartland last week said second-quarter sales volume involving small and midsize merchants totaled a company record $17.5 billion, up 7.2% from a year earlier, helping to drive one of the best quarters for the company in recent years (
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