This story has been updated.
Heartland alleges in a lawsuit filed Jan. 29 that Mercury Payment Systems is using deceptive trade practices to compete against it.
Princeton, N.J.-based Heartland claims that Mercury violates California law in misleading merchant customers by "deceptively hiding its excess profits in the interchange fees charged by credit card networks and their issuing banks," Heartland states in a Jan. 30 press release.
Heartland filed its suit in U.S. District Court in the Northern District of California, San Francisco Division.
Mercury Payment said it would "vigorously defend against the lawsuit filed by Heartland," according to a press release it published Jan. 30. Mercury says it stands by its business and pricing practices.
In its lawsuit, Heartland seeks to stop what it calls Mercury's "routine deceptive pricing practices" to secure new retail customers and maintain existing merchants. The suit also seeks to recover full value for each merchant and prospect Mercury has "wrongfully taken" from Heartland by allegedly falsifying pass-through interchange costs."Heartland has consistently advocated for fair, transparent and ethical credit, debit and prepaid card processing and billing procedures for small and mid-size businesses," Robert Carr, chairman and CEO of Heartland, states in the press release.
"The deceptive pricing practice of falsely inflating pass-through interchange fees not only constitutes unfair and illegal competition, it also costs even the smallest of merchants hundreds, or sometimes even thousands of their hard-earned dollars each year without their awareness," Carr adds.
Heartland states that it has reviewed hundreds of monthly statements from Mercury for different merchants throughout the United States, which indicate that Mercury repeatedly and regularly engages in a practice of charging its customers inflated interchange fees without disclosure.
The complaint also alleges Mercury imposes significant costs and barriers for changing providers, falsely informs merchants that they are the only processor that supports their point of sale equipment, and falsely represents the company in commercial advertising and promotions as guaranteeing the best rate, among other charges.