POINT ROBERTS, WA - February 22, 2013 (Investorideas.com mobile
payment stocks newswire) Investorideas.com, a leader in sector research
for independent investors, issues exclusive insight into the
opportunities and challenges in the payment processing industry from
management of Heartland Payment Systems and Calpian, Inc., and how the
two companies are planning for the future with innovative mobile
strategies.
Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems ( NYSE :
HPY ) and Mr. Harold Montgomery, Chairman and CEO of Calpian, Inc. (
OTCQB : CLPI ) share their industry knowledge on four key points shaping
their industry; where they see the biggest growth opportunities, how
new EMV transaction requirements will impact the industry, their mobile
growth plan and lastly, what they feel are the biggest challenges facing
the payments industry moving forward.
Q: Investorideas.com
As an industry leader in payment processing, where do you see the biggest growth opportunities?
A: Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems
In card acquiring/processing, we see our biggest opportunities in
further broadening our capabilities so that we can address additional
merchant segments and/or bring new solutions to market. As examples of
the former, we have launched significant initiatives in grocery and
ecommerce, areas where we have previously had a limited or nonexistent
presence. For the latter, we are highly focused on the implications of
the development of cloud-enabled tablet processing. As these solutions
develop, driven by the extensive interest in using tablet/smart phone
interactions to change the merchant/consumer relationship through
offers, discounts, etc., we see significant opportunities in the
disruption of existing processing approaches and in particular the
existing solutions offered by higher-end POS systems. We are also
confident that the merchant will need a much more robust
network-management capacity, given the reliance on the cloud, and are
rolling out a hosted network solution that will address this specific
issue.
We are also deeply focused on a broader range of processing
solutions that we think can drive faster growth for Heartland Payment
Systems in the years ahead. Pro forma for two acquisitions that closed
in December, approximately 30% of the company's Net Revenue in 2013 will
be generated in non-card activities. In particular we would focus on
two drivers of growth: payroll, and our school-related offerings
(differing solutions for K-12 and University). In payroll, we view the
acquisition of Ovation Payroll at year-end as being truly
transformative, bringing on board a new leadership for the combined
businesses, combining the processing onto one common platform for scale
economies, and driving innovation in our sales approaches. In the
school-related field, we now provide processing for the lunch program of
30% of the public schools in the US, and see substantial growth in
replacing checks and cash with electronic loads of the student's prepaid
account. At the college and university level, with the acquisition of
ECSI, we now offer a host of processing solutions to more than 2,000
schools, and believe we have significant cross-sell opportunities with
our broad set of processing solutions. Both of these businesses have the
potential to grow much more quickly than the card business, and so they
will be critical to helping drive faster overall growth in the coming
years.
A: Mr. Harold Montgomery, Chairman and CEO of Calpian, Inc.
We believe the small to mid-sized merchant space is a vibrant and
dynamic market segment. Every merchant is interested in cost-competitive
payment processing and that's where we specialize. Offering customized
solutions at an affordable cost to the small business owner is crucial
to his ability to maintain and grow his business. Payment processing is
as critical a business function to a merchant as is the goods he sells
-- it must work seamlessly every time. Calpian works with merchants, who
these days are burdened with more and more costs and government
regulations, to ensure that each of our merchant customers receives the
most cost-effective and regulatory compliant solution for their specific
type of business.
Calpian's acquisitive strategy in the small to mid-sized merchant
space presents what we believe to be the greatest opportunity for growth
under current market conditions. The payments industry has long been
one of entrepreneurs and as such, there are numerous very well run small
Independent Sales Organizations (ISOs) serving this merchant space who
are looking for larger partners with capital strength. By partnering
with Calpian, these ISOs receive both the working capital they need to
grow their businesses and access to Calpian's superior pricing and
payment processing product options.
Q: Investorideas.com
How do new EMV transaction requirements impact the industry?
A: Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems
At this point, the impact of EMV is difficult to predict. The card
brands have not been very effective at articulating the value
proposition to either merchants or issuers, so progress has been slow.
It also appears that any reterminalization (exchanging one terminal for
another), which the successful roll-out of EMV would force, will be
greatly impacted by the success in the marketplace of both contactless
solutions (NFC or bar code) and new tablet-based processing
alternatives. We will be learning a lot about these solutions over the
next two years, and Heartland's intention is to remain engaged with all
of the new solutions so that we can bring the most effective ones to our
merchants when the timing is right.
A: Mr. Harold Montgomery, Chairman and CEO of Calpian, Inc.
EMV presents an opportunity for merchants to achieve a level of
transaction security they have never before enjoyed by requiring a chip
and PIN card to be used at the point-of-sale (POS). It's also an
opportunity for companies like ours who support merchants to educate
them about the benefits and requirements of EMV and assist in their POS
equipment upgrade needs. Despite the benefits that EMV presents, the
U.S. rollout, scheduled to begin April 1, will most likely be delayed
because the card associations have not provided a clear implementation
road map to the various players in the payment chain -- system and
program updates to support EMV processing must be made at the card
issuer, card processor and hardware manufacturing levels -- to name a
few. Card-holding consumers must be issued new plastic cards with an
embedded chip. Merchants must be educated on the new procedure at the
point-of-sale and must upgrade their processing equipment to accept EMV
cards. There is a lot to do and a lot of questions throughout the
payments industry that must be answered before we will effectively make
the transition to EMV in the U.S. Calpian is committed to monitoring the
latest EMV developments so that our merchants are educated, equipped
and ready when the time is right.
Q: Investorideas.com
What is your company's mobile growth plan?
A: Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems
We introduced our MoBuyle fob solution, which works with iOS and
Android tablets and phones, in 2012 and since then, have enabled many
thousands of our merchants with this capability. Unlike many
competitors, we have been focused on providing an already-active
merchant with added flexibility with this solution, for example by using
a tablet outdoors in the summer, or line-busting, or as back-up
processing when the merchant's primary system is not operating. At the
same time, we are considering how we want to address the micro-merchant
category where mobile solutions have been highly popular; Heartland has
never wanted its sales force to sell to such small merchants, as the
economics just don't make sense. At the same time, we believe that we
have numerous partners including banks and professional associations
that may well prove to be highly effective in providing a conduit to
their customers and members in a cost-effective way.
A: Mr. Harold Montgomery, Chairman and CEO of Calpian, Inc.
Calpian has both a domestic and a global strategy with regard to mobile wallets.
In the U.S., we are monitoring the developing mobile market
carefully with the intent of identifying services we can provide which
make sense when it makes sense to offer them. There are a number of
mobile payment solutions available in the U.S. market now, but none has
really taken hold yet -- largely because the convergence of consumer
demand and handset functionality (the most widely used smartphone in the
U.S. -- iPhone -- did not equip their latest release, iPhone 5, to
process mobile transactions) has not yet come together. Only when
consumers require mobile wallet functionality and phone manufacturers
equip phones with the ability to process them en masse, will a mobile
payment merchant solution begin to emerge and will it make sense to
offer it to our merchant customers.
Calpian's global mobile payments strategy centers around our
ownership of Mumbai, India-based "Money-on-Mobile," the largest mobile
payments processor in India. Our experience in India has been
instructive to us about the ways consumers integrate mobile wallet
functionality into their lives on a daily basis. It's enabled us to
identify new offerings and merchant markets for mobile payments and to
be a large player in the global mobile payments initiative. The growth
of Money-on-Mobile to over 35 million unique users in less than two
years is a dramatic demonstration of the power of mobile payments and
the importance of providing a solution that fits both the specific
market conditions and the specific consumer's needs in that market.
We've done that in India with Money-on-Mobile
Q: Investorideas.com
Do you see the biggest challenge as government regulation moving
forward, or are there other factors that will impact the industry even
more?
A: Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems
Historically, government regulation has not had a meaningful impact
on our business, except indirectly through bank regulators. Of course,
the Durbin Amendment to the Dodd-Frank legislation had a substantial
impact on the pricing of the majority of debit card transactions, which
resulted in a number of unintended consequences that the industry is
still grappling with. Looking forward, while there could be further
legislative action, and certainly will be impacts from judicial actions
-- the Visa/MasterCard class action settlement that now allows merchant
surcharging is a good example -- we expect the card processing
environment to be tremendously dynamic in the next few years, driven by
technology advances that are just starting to play out. To succeed in
the coming years we believe an acquirer will have to make thoughtful
investments, implement successful sales and marketing strategies, and
move aggressively to engage merchants in the opportunities to improve
both their processing environment, and customer interactions. We believe
that Heartland, having achieved significant scale on our modern
processing platforms, and having the industry's best and largest sales
organization, is ideally suited to benefit from the substantial
disruption we see in the coming years in this market.
A: Mr. Harold Montgomery, Chairman and CEO of Calpian, Inc.
Government regulation is definitely a concern, particularly after
the Durbin Amendment wreaked havoc with debit card processing and
affected the entire payments chain, including the consumer, in mostly
unfavorable ways. With recent court rulings regarding surcharging and
allowing spending limits on credit card transactions, it seems there are
always changes to the rules governing electronic payments. Calpian
monitors all such events so that our merchants are informed about both
their rights and the requirements they must meet based on such rulings.
Although we don't see any major legislation being currently considered,
when new products and processes -- such as EMV and mobile payments --
are introduced with what will invariably be the normal kinks any new
product or service, we may see some legislative activity in response.
Among the near term trends that Calpian sees as industry game
changers are innovative product and pricing packages and EMV are the top
two that we are watching today.
About Calpian ( OTCQB : CLPI )
Calpian, Inc. (CLPI) is a publicly traded company with corporate
offices in Dallas, Texas and mobile payments emerging-market operations
through its subsidiary in India. Calpian's U.S. business focuses on the
10,000 Independent Sales Organizations (ISOs) that serve approximately
two million small merchants across all industries in the U.S. who pay an
estimated $1 billion in annual residuals. Calpian's Indian subsidiary
offers Money-on-Mobile, a pre-paid mobile payment solution, to more than
122,340 Indian retail locations. Calpian's management team has over 70
years in combined experience in the payments business. Calpian's CEO,
Harold Montgomery, is a recognized industry leader who has provided
expert testimony to the U.S. Congress and Federal Reserve Bank on
payments-related issues and regularly appears in numerous industry
publications, such as Transaction World Magazine.
www.calpian.com and
http://www.money-on-mobile.net/.
About Heartland Payment Systems ( NYSE : HPY )
Heartland Payment Systems, Inc., the sixth largest payments
processor in the United States, delivers credit/debit/prepaid card
processing, school solutions, marketing solutions, end-to-end encryption
technology, campus solutions, payroll solutions, and related business
solutions and services to more than 250,000 business and education
locations nationwide. A FORTUNE 1000 company, Heartland is the founding
supporter of The Merchant Bill of Rights, a public advocacy initiative
that educates merchants about fair credit and debit card processing
practices. Heartland also established The Sales Professional Bill of
Rights to advocate for the rights of sales professionals everywhere.
More detailed information can be found by visiting
www.HeartlandPaymentSystems.com
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