• 1. ibs  |  December 17th, 2006 at 8:17 pm

  Heartland likes to hide an extra $.05 trans fee too.
  Check the last page of the statement- you will see it everytime.

  We are all in the biz to make $- BUT let’s be upfront people!

• 2. WAC  |  December 18th, 2006 at 2:33 pm

  I would like to get the whole story here………. the $.04 - $.10 transaction fee is based on the equipment the merchant has and a direct pass through at cost. (processing platform cost ) By comparison, the $ .19 could be $ .15 per transaction higher with your agent.
  Let’s say this is a small merchant doing $5,000 per month in volume with an average ticket of $15.
  Approx 333 transactions per month.
  Your agent at $ .19 per trans = $63.27 in fees. (does not include mid qual and non qual card surcharges)
  Heartland at .40% and $ .04 per = $33.32 in fees per month
  Heartland at .40% and $ .10 per = $53.30 in fees per month

  WHO WAS GIVING THEM A BETTER DEAL????

  Until you know the pricing structure and what you are really charging merchants, DO NOT bad mouth competition, as you say. Thanks for sharing your ignorance in your industry.

• 3. jestep  |  December 18th, 2006 at 2:49 pm

  Heartland was quoting a passthrough rate. They are going to add .4% and ($.04 - $.10) on top of interchange. At a minimum they would pay a transaction fee of $.14, not $.04, so at best their transaction fee is $.05 lower.

  Visa interchange is 1.54% + $.10 per transaction. This means that Heartland is going to charge them 1.94% and ($.14 - $.20) per transaction, MasterCard: 2.04% and ($.14 - $.20).

  1.94% & $.20 across $5000 (333 transactions) = $97 + $67 = (~$164 Total in fees per month).

  Our agent would have been charging ~$147 (1.68% & $.20).

  The point of the post was not ever to make a price to price comparison, even though our agent would have been cheaper, (especially after MasterCard is thrown in). It was to point out a deceptive business practice, which is exactly what it is.

• 4. Justice  |  December 23rd, 2006 at 9:56 am

  Let’s start at square one.

  Heartland made a full disclosure to the merchant, and I can prove it. Most any store with more than 50 locations has graduated from a bundled billing structure which lists fee categories called “Mids and Nons.” Mids and Nons are the true mystery categories, not comprehended fully by the merchant. For any merchant who does fully comprehend the meaning of “Mid” or “Non” would want a better payment structure on the offer table.

  The further down the rabbit hole one travels in the payment processing industry, the better grasp one gets on how exactly all parties to a transaction get paid. Let me explain that statement. Diamond Management & Technology Consultants posted a report in pie-graph format in the November 06 edition of Digital Transactions magazine. The graph was called “What Interchange Pays For.” Quite interesting. Before we cover one of details from this graph, it is illuminating to hear how field reps “fully disclose” what Interchange is, and what Interchange does. Reps tend to toss the word “Interchange” around as though it were some mystical code that only the elect have passage to understand.

  Next point: The Bankers who make up the Board of the Visa / MasterCard Association are responsible for structuring Interchange … which they do to their benefit.

  So, the core of the conversation in the posts above mine needs to be directed back to the foundational question of “who gets paid what?”

  The first party to be paid is the Card Holder, believe it or not. The Card Holder gets paid a hefty portion of the Interchange pie. The American consumer currently takes home …. [pause for effect] 44% of “Interchange.” That statement there should cause several people to go back to the books and do some more research to re-establish some of their fundamental understandings of this industry. We’ll leave the rest of the pie for you to discover in your research.

  Last point before the conclusion: Let’s get personal. Check your own personal mail box at your own house. I am willing to guess the only card offers that stay in your hand any longer than the 5 seconds it takes to put them in the shredder are the ones that say real bold on the envelope “Earn 5% Cash Back” or “Get Free Gas” or “Earn Points, Trips, Tickets, Trucks, all kinds of Toys.” You still laugh and shred the offer. But consider this statistic; 53% of all Visa cards issued in the year 2005 were tied back to some sort of Rewards Program.

  Now, when deciding which rep provided “merchant A” with the most accurate information about the reality of how the card payment industry is going to effect that merchant’s bottom line … ask yourself these questions:

  1. According to your understanding of the payment industry, what % of an average Sit Down Restaurant’s total sales volume will fit nicely into the Interchange categories of: Rewards 1&2, Standard, Corporate, Commercial, Signature, Small Ticket, World, Merit 1, Elite, Travel, or the other Interchange categories besides “Retail?”

  2. Look at your own paycheck and residual spreadsheet to answer this one. What percent of your personal take home pay is derived from the categories called “Mids and Nons?” Better yet, does your Processor disclose to you how many basis points of margin both you and they making in these mystery categories?

  Last sentence: Armed with the right answers to these two key questions, you will have a new perspective on which of the sales reps made the best offer to this specific merchant.

• 5. jestep  |  December 27th, 2006 at 4:25 pm

  Heartland made a full disclosure to the merchant, and I can prove it.

  Whether or not heartland made a full disclosure is irrelevant. The simple fact that the merchant thought they were going to pay .4% for their credit card transactions undermines any claim to full disclosure in my book.

  Now, who’s responsibility is it to ensure that the fees are understood? Obviously it is the business owner’s. But, it is assumable that a business claiming full disclosure is going to adequately explain to a business owner what they will be paying, especially in an instance like this where a non-standard pricing structure is used.

  Next point: The Bankers who make up the Board of the Visa / MasterCard Association are responsible for structuring Interchange … which they do to their benefit.

  So, the core of the conversation in the posts above mine needs to be directed back to the foundational question of “who gets paid what?”

  The first party to be paid is the Card Holder, believe it or not. The Card Holder gets paid a hefty portion of the Interchange pie. The American consumer currently takes home …. [pause for effect] 44% of “Interchange.”

  Yes, the bankers and card issuing banks that control Visa / MC structure interchange in their favor. It doesn’t add to their credibility that those same banks collect interest on their customer’s credit cards, which provides far more revenue than credit card processing. With that in mind, the reward / cash back / airline card programs that contribute to consumers accounting for 44% of interchange are essentially marketing so that card issuers can get more cards to consumer. It’s hard to say that consumers are responsible for this either. They never really requested it, they were just offered it. In the end, the businesses that accept cards are the ones who ultimately suffer from interchange prices wherever they are derived from.

  Last sentence: Armed with the right answers to these two key questions, you will have a new perspective on which of the sales reps made the best offer to this specific merchant.

  Again, ideally this would work perfectly, but this can only be accurate assuming that the person signing up for the account has the knowledge to understand what they are getting into. Ask the majority of business owners new or not, if they know what interchange category their transactions falls into. Ask them if they know what a pass through rate is. Even simpler, ask them to explain where they fit in looking at Visa or MasterCard’s interchange tables. I’ll bet that most cant do it, even with the information sitting right there.

• 6. PSI  |  January 25th, 2007 at 12:45 pm

  I have competed with heartland for years and I can say one thing, when it comes to effective rate, try to compete. They are always close to the lowest and hardest to compete with. They may use a little smoke and mirrors, but who doesn’t in this industry? Truth is they do a great job with pricing structure for the merchants benifit. Don’t give them a hard time for trying to charge a merchant a different way than the rest of the 3 tier agents out there!

• 7. Earl Jamison  |  February 7th, 2007 at 4:00 pm

  I used to own a little steak house down in Kansas City. I used to do all my processing with Heartland, that company screwed me over with that exact same thing. I can’t even believe those bastards, ran me out of business and money, my credit is screwed, and my business is closed. I am greatfull you are letting people know not only about Heartland, but about everything to look for when you find a merhcant account. Thank you Earl

• 8. Jams Johnson  |  April 27th, 2007 at 1:31 am

  My son has a small detail biz and he showed me his Hartland statement and asked me if he could get better rates.

  The statement showed:

  1.64% = $.10
  .09% + $.10
  $5.00 statement fee

  I told him to keep this deal because it was just above cost.

  A few months later he comes to me with another statement from heartland
  and it has a quarterly billing fee of $40.00 added to it.

  He called heartland and they told him it’s their profit !

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