Heartland, VeriFone Food Fight Flares Up Again

Written by Evan Schuman
November 12th, 2009

In last week’s saga of two security vendors filing exaggerated half-truth accusations at each other, Heartland Payment Systems issued a statement that apparently contradicted its own court filing. This week, the two firms are rumbling about a federal judge’s decision and whether a Web site is still up or not in addition to generally throwing insults back and forth.

(For those who watch our coverage closely, we said last week that we were upgrading this particular food fight from bizarre to surreal. This week, it gets kicked up to borderline psychotic. If Heartland and VeriFone get any worse, we’re going to have to hit an unabridged thesaurus somewhere.) Before we get into this week’s barbs, here’s a little background recap.

VeriFone started the dance by suing Heartland, accusing it of trying to sell a POS terminal that infringes on a patent owned by VeriFone Israel. When Heartland wouldn’t agree with that assessment, VeriFone said it would cut off all tech support for the Heartland customers who use VeriFone technology, which is a lot of Heartland’s customers. Heartland then counter-sued VeriFone for having threatened to cut it off.

Then VeriFone made a play to lure away Heartland’s customers by offering free tech support if those customers would work directly with VeriFone. After that, Heartland issued its own statement saying that VeriFone can’t support Heartland’s customers because they’re using proprietary Heartland programs. VeriFone disagreed and pointed out that Heartland had admitted in its lawsuit filing that its customers do need VeriFone’s tech assistance.

We reported that last exchange last Wednesday (Nov. 4) and contacted Heartland late that afternoon seeking comment. It took Heartland almost five days to respond and decide that the comments were out of context. Their explanation of how the comments were taken out of context: “The comments in our litigation were about the petroleum business, which does not use desktop devices but uses store controllers for pay-at-the-pump devices. The critical issue here is that for the vast majority of our merchants–those using standalone terminals–not only can we provide all the support but VeriFone cannot provide full payments processing services and support.”

Heartland also added a new accusation, saying that VeriFone apparently was negotiating with Heartland and wanted to charge Heartland some kind of a royalty fee for the technology. This accusation prompted a Heartland statement saying, “We refuse to charge our customers ‘junk fees’–unnecessary fees that provide no added value or service. Our refusal to pass a new VeriFone-imposed junk fee onto our customers has angered VeriFone’s CEO and led the terminal manufacturer to make false claims about our service.”

Also, Heartland’s statement noted that the litigation papers in question were filed almost two months ago and added: “For obvious reasons, we have found alternative sources for some of those services since that time.”

The store controller versus standalone terminal sounds plausible enough. In fact, the comments in the lawsuit were indeed under an area that discussed petroleum customers. This out-of-context argument centers on a legitimate point, namely that the technologies used are quite different.

But VeriFone doesn’t quite see it that way. “Out of context? You have the filing: It’s their words directly. Regardless of the industry, VeriFone systems run on VeriFone operating systems. Heartland could not, should not mislead merchants about its inability to support VeriFone software and hardware,” said VeriFone spokesperson Pete Bartolik. “The point that they don’t seem to want to address is, whether it’s in petroleum or convenience stores or other types of retail outlets, the software that runs the machine is still coming from VeriFone. This is pure obfuscation.”


One Comment | Read Heartland, VeriFone Food Fight Flares Up Again

  1. A Long Time Ago Says:

    The software referred to is from Lipman (Nurit)
    Before Verifone bought them, Heartland did business with them.
    Heartlands “Exchange” processing platform bought the rights to use the source code, all of it.
    This should be said to truly educate about the history.
    And if this proves true, Heartland is in the right.


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