Internet Technology, Marketing, And Security Essay

1496 words - 6 pages

Cover Page
Student: Melissa Zell Lee

Internet Technology, Marketing, and Security

Bus 508
Professor: John Theodore
November 22, 2011

Heartland Payment Systems is known for fair, fully disclosed pricing and empowering merchants who like to take control of payments processing costs. More than 11 million transactions are processed daily with over $80 billion transactions a year, making Heartland the 5th largest payment processor in the United States and 9th in the world (Heartland, 2011). However, a data breach occurred last year in 2010 for Heartland which compromised tens of millions of credit and debit card transactions. Such figures make the Heartland incident one of the ...view middle of the document...

Heartland created the E3 program internally in 2009 and remains to be the most “secure encryption available” according to the company, even with the security breach in 2010.
Heartland’s marketing strategies encompasses the role of empowering merchants to take control of their credit card processes. The most recent program comes from what they call “Durbin dollars”. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, Heartland placed a cap on interchange or transaction fees. While the company originally proposed the cap to be set at 7 to 12 cents per transaction, the final cap approved was 21 cents plus 0.05%, and an additional discretionary 1 cent for institutions employing effective fraud prevention initiatives (Heartland, 2011). Though the final number was more favorable to the banks than the initially proposed cap, the Durbin Amendment represents a significant win for merchants and became effective October 1, 2011.
Heartland also has a free cost analysis application on their website to determine how much money merchants would save if they switch to Heartland under the Durbin Amendment. This is a great complimentary marketing strategy to “Durbin dollars” because it could easily persuade merchants to switch after they see the comparing cost differences between Heartland and what they currently pay. Applications such as these helps people make better decisions and falls right in line with Heartlands goal to educate merchants about this field of business and their rights in the credit card processing market.
Despite helping merchants, the Amendment was highly disputed in the legal world because it directly lowers banks profit on each credit card transaction. In fact, Heartland just released their first article on November 14, 2011 stating the Durbin Dollar savings is already nearing a $20 million mark in the few 6 weeks it has existed. Banking and card industries ramifications to this change include launching new fees to make up for the revenue lost. Among them is Visa's planned network participation fee for all merchants who accept their debit, credit or prepaid cards. However, increasing consumer’s fees is not the right answer on most occasions, as proven when 650,000 Americans switched to credit unions in October (taking $4.5 billion with them) because the Bank of America began charging a monthly $5 debit card fee (Moynihan, 2011).
As another excellent marketing strategy Heartland wrote The Merchant Bill of Rights, a public advocacy initiative that educates merchants about fair processing practices. Heartland remains steadfast and grounded in the core values with a reputation as the honest broker of the payment industry. The Merchant Bill of Rights levels the playing field for business owners. It identifies 10 essential rights that can help merchants achieve greater success — from the right to know the fees merchants pay for every transaction to the right to have live customer support 24/7. With...

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