Payment Processing and Mobile Strategies From Heartland Payment Systems (HPY) and Calpian, Inc. (CLPI)

Payment Processing and Mobile Strategies From Heartland Payment Systems (HPY) 
and Calpian, Inc. (CLPI) 
"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" - Mr. Bob Baldwin,
Vice Chairman of Heartland 
"Our experience as owners of Money-on-Mobile, India's largest mobile
payment processor, is instructive about how consumers view mobile
payments and how we are helping to positively change people's lives
with this technology." - Mr. Harold Montgomery, Chairman and CEO of
POINT ROBERTS, WA -- (Marketwire) -- 02/22/13 --,
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. 
 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
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, et
c., 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.
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. 
 How do new EMV transaction requirements impact
the industry? 
A: Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems
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.
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 de
velopments so
that our merchants are educated, equipped and ready when the time is
 What is your company's mobile growth plan? 
A: Mr. Bob Baldwin, Vice Chairman of Heartland Payment Systems
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.
has both a domestic and a global strategy with regard to mobile
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  
 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. and 
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
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