Mercury Payment Systems, LLC Brought to Federal Court by Heartland Payment Systems

Feb 10, 2014

Heartland Payment Systems (NYSE: HPY) filed a lawsuit against Mercury Payment Systems accusing them of deceptive pricing practices with the aim of securing new retail customers and maintaining existing merchants. The deceptive practices also include false advertising, intentional interference with contractual relations and prospective economic advantage, and unfair payments. The lawsuit, filed in the United States District Court in the Northern District of California, seeks to hold Mercury responsible for its deceptive trade practices and recompensing the full value of each merchant and prospect Mercury took from Heartland through deceptive practices.

Businesses such as Heartland and Mercury provide processing services for electronic payments—linking businesses and card-issuing banks. However, the difference is that Heartland is accusing Mercury of increasing its markup by re-categorizing them as interchange fees. These inflated rates are charged without the customer being aware.

This can manifest itself in the example of a restaurant chain comparing prices for electronic payment processing providers. Heartland may charge a merchant seven cents per transaction while Mercury undercuts that with six and a half cents per purchase. As a result, the business will switch to Mercury. Yet the existing discrepancies indicate that Mercury inflates the fee by as much as four cents costing Heartland a customer and the merchant a significant amount of money over time.

This creates an unbalanced playing field for the two credit card payment processors all at the expense of the common merchant. The lawsuit is sending waves around the merchant services providers sector as the outcome of this lawsuit may impact future business practices for all concerned parties in this industry.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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