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With Its Dinerware and pcAmerica Deals, Heartland Lays out a New Direction for Leaf
February 16, 2015

By Kevin Woodward

Heartland Payment Systems Inc. has acquired point-of-sale system developers Dinerware Inc. and pcAmerica, both makers of restaurant point-of-sale systems, Heartland announced Friday. Terms were not disclosed.

Image Credit: Leaf
A Leaf presenter rests in a base station.

The acquisitions spurred Princeton, N.J.-based Heartland to create a dedicated business unit call Heartland Commerce, which includes Dinerware, pcAmercia, Xpient, Leaf, and Liquor POS.

The deals also mean Heartland will scale back POS development at Leaf, a company it bought in August that had developed a cloud-based POS system. With Dinerware and pcAmerica each working on similar systems, Heartland says the overlap with Leaf means it will “stop POS development efforts at Leaf,” though some components will become part of Heartland Commerce.

“With a decision to utilize off-the-shelf hardware, there is no longer a need to develop purpose-built hardware or related operating systems and payment software,” Robert O. Carr, Heartland chairman and chief executive, told analysts Friday during a conference call to discuss earnings. “Therefore, Leaf's direction will be changed and Leaf will become the focal point of our POS cloud-based development efforts and as such a key to expanding our technology beyond restaurant and retail and into additional industries.”

Carr said Heartland has 90,000 new customers because of Leaf, Xpient, and its other POS system businesses under the Heartland Commerce umbrella. “Hardly any of these customers are using payroll or time scheduling or labor-cost controls and so on tied to the POS,” he said. “We bring that, all that functionality to these 90,000 new customers versus the small number of customers that Leaf had been able to develop. We were building it. It was coming along fine, but this sort of leapfrogged us and kept us from having to develop 90,000 customers on our own organically.” Nationally, Heartland has more than 250,000 business locations.

POS systems have been a boon to payments companies because merchants that use them rely on them for more than payment processing, which can reduce the likelihood of switching to another processor because of price. Vantiv Corp., for example, paid $1.65 billion for Mercury Payment Systems, which established relationships with POS-system developers.

Others, like Harbortouch Payments LLC, have developed their integrated products. “While standalone terminals are becoming increasingly commoditized, POS systems deliver real value to merchants through countless time- and money-saving features,” Harbortouch chief executive Jaren Isaacman, tells Digital Transactions News in an email. “These benefits are what make POS systems such powerful customer-acquisition tools. For this reason, I believe that we will see this convergence of payments and POS continue to accelerate.”

For the fourth quarter, Heartland reported revenue of $604.6 million, a 14% increase from $530.4 million in the fourth quarter of 2013. Heartland reported a $19.8 million loss for the quarter, compared with a $17.4 million profit a year earlier. Heartland said it had a $41.4 million charge in the quarter related to Leaf and some other investments.

For the year, Heartland’s revenue was $2.31 billion, a 7.9% increase from $2.14 billion in 2013. Net income for the year was $33.9 million, a 56.9% decrease from $78.6 million.

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