SCOTTSDALE, Ariz. -- Robert Carr, longtime CEO of Heartland Payment Systems Inc., made good on his promise to deliver a controversial keynote speech last week at the Electronic Transactions Association Strategic Leadership Conference.

Taking a position certain to rankle some regulation-weary entrepreneurs, Carr insisted that the Federal Trade Commission should police the acquiring industry unless it can halt fraudulent practices on its own. (Related guest column on page 25.)

"The FTC should put a stop to it," he told attendees.

Outlining what he sees as the problems, Carr accused some ISOs of boosting profits by falsifying interchange rates on merchant statements.

Some ISOs also mislead processors by boarding high-risk businesses for transaction services and then camouflaging the clients’ true nature by intentionally assigning them incorrect merchant category codes, he said.

A few ISOs even go so far as to make mathematical errors in their favor on merchant statements, Carr maintained.

He also chided ISOs for inserting shady provisions into the fine print of merchant contracts. In one example, a proviso gives clients 30 days to withdraw from the agreement after a rate increase, but the ISO makes certain the merchants don’t know about the hike until 45 days after it takes effect.

Carr made predictions for the acquiring industry, too.

While a number of other speakers at the conference seemed puzzled over the slow adoption of mobile payments, he confidently called mobile "the way of the future" and cautioned that the transition would occur soon.

Meanwhile, merchants are tiring of funding loyalty rewards, he warned attendees.

At the same time, authentication in the cloud is overtaking Near Field Communication, Carr said.

"NFC has no advantage," he maintained.

Decoupled debit will quickly increase in importance, and automated clearinghouse transactions will become nearly instantaneous, Carr predicted.

Some tech companies will fail because they neglect to figure out how their handiwork will turn a profit, he said.

In conclusion, Carr urged the ETA to adopt guidelines for acquirers, offering Heartland’s list of principles as a model. The principles include one "bill of rights" for merchants and another for salespeople.





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