To Catch A Predator: Heartland Payments

Hard work to fill the shoes of the venerable Jeff Sloan.

Jeff worked tirelessly to ensure a day didn’t go by that a Global Payments merchant wasn’t forking over their money on a make-believe fee.

You simply cannot fathom the effort required to create such revenue schemes.

You need a rat.

A spinning wheel.

And a list of fabricated fees.

So. much. work.

Well, it looks like ol’ Cam is going to give it his best shot.

Stepping up to the legend.

Cam’s latest concoction is an “infrastructure upgrade fee”.

What is an infrastructure upgrade fee?

Pfft, might as well ask a sexual predator how much forced intercourse is too much intercourse.

We love how the amount isn’t an even $200 or $250 but ends with a random integer – $4 – just to give it a whiff of legitimacy.

Cam’s thought process in designing the fee: We need to make it seem legitimate so the amount should be oddly specific…

Merchant’s thought process after seeing the fee: Oh this must be real ‘cuz otherwise it would have just been $250

Genius.

The average Heartland merchant is probably doing $500K of GPV. $254 = 5 bps.

The average restaurant doing $500K of GPV should be paying no more than 40 bps in payments margin, so 5 bps is a solid 12.5% growth rate for… doing nothing.

Perfect, Cam.

Now here’s where this gets even more hilarious.

This particular merchant is using a POS that’s not owned by Heartland but is instead partnered with Heartland.

This POS is undoubtedly contractually obligated to a revenue/profit share with Heartland.

Well, we’d bet dollars to donuts that this $254 fee conveniently falls outside the scope of the agreement with Heartland, meaning Heartland gets to munch the whole fee as profit.

Yum.

And this is why ISOs and partners hate payments companies: they directly abuse the “partner’s” customers and the partner has to deal with the fallout.

Keep at it, Cam.

If you work real hard you just might catch up.