In a David versus Goliath contest, US payments processor
Heartland Payments Systems has filed an anti-trust
(anti-competitive) and unlawful competition lawsuit against the
world’s largest merchant acquirer, Chase Paymentech its POS
specialist unit, Merchant Link and MICROS Systems, a vendor of
restaurant industry hardware and software.
In terms of transactions processed Chase Paymentech is about 12
times as big as Heartland, having reported $661 billion in bank
card and debit volume in 2006, versus Heartland’s $55 billion.
Heartland ranks as the US’s sixth-largest merchant payment
processor.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
In its lawsuit Heartland alleges that the three companies have
caused increased processing prices for table-service restaurants
through an anti-competitive tying arrangement which violates the
Sherman Antitrust Act and New Jersey’s unfair competition laws.
According to Heartland the tying arrangement forces independent
competitors to pay for the use of Merchant Link’s gateway in order
to process credit and debit card payments on the MICROS POS
platform.
“We have repeatedly tried to impress upon MICROS that its
exclusive contract with Merchant Link is detrimental to the
restaurant industry,” said Robert Carr, chairman and CEO of
Heartland.
“Merchant Link adds no unique value to the transaction clearing
process. It sits between MICROS and the card processing industry,
serving as a toll collector and gatekeeper for Paymentech. By
creating this illegal scheme, Paymentech makes it nearly impossible
for many restaurant owners to use any other card processor.”
He added that Paymentech has “repeatedly charged restaurant
owners a higher price than it would in a truly competitive
environment”.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataIn its complaint, Heartland alleges that MICROS forces all
restaurants using its POS systems to agree to use Merchant Link as
the exclusive gateway for credit and debit card processing and
forces all card processors to pay a fee to Merchant Link “for the
privilege” of connecting to the MICROS POS platform. It is also
alleges that MICROS receives a percentage of the revenues Merchant
Link generates.
In its complaint Heartland also alleges that Chase Paymentech
uses its ownership of Merchant Link – and Merchant Link’s
exclusionary agreement with MICROS – to dominate the market and
raise the cost of processing for all restaurants using MICROS
software. The suit asserts that because it owns Merchant Link,
Chase Paymentech can routinely exempt itself from the Merchant Link
fees other processors must pay to do business on the MICROS
platform.
However, the complaint continues, Chase Paymentech still charges
restaurateurs prices that are higher than they would be if Merchant
Link was not involved and if the competitive playing field was
level. In addition, the suit claims the tying arrangement allows
Chase Paymentech to collect revenue from every credit and debit
card transaction that occurs on a MICROS POS system, even when card
transactions are processed by a competitor.
The complaint also alleges that when selling its POS systems,
MICROS and its dealers do not disclose all the costs associated
with the Merchant Link tie to restaurateurs. As a result, stated
Heartland, restaurateurs end up paying inflated costs, with no
ability to use alternate vendors.
In its lawsuit Heartland is seeking a permanent injunction
against the tying arrangements that exist between MICROS and
Merchant Link. “Heartland wants to re-establish a level competitive
playing field in the table-service restaurant industry where wecan
compete with Paymentech for MICROS business and win based on our
superior pricing structure, service infrastructure, and commitment
to transaction security, said Carr.
“The artificial and illegal barrier to entry that Paymentech has
constructed through its shrewd and illegal dealings with MICROS
must end,” he concluded.
