One of the leading payment processing companies, Heartland Payment Systems, Inc. (HPY), has inked a deal with the merchant financing operations of American Express Company (AXP) – American Express Merchant Financing. This deal will make Heartland the first processor to distribute American Express Merchant Financing.
As per the deal, Heartland’s clients will receive highly price-competitive loans based on their annual card processing volume. American Express Merchant Financing will let these clients access an amount of up to $0.75 million. Thus, more and more small businesses will be able to support their growth requirements. Also, the deal permits Heartland’s clients to renew their loans 12 months after the initial disbursement.
Since the recent recession, small businesses have been struggling to obtain loans to support their operations. Although these companies are willing to incur expenses for enhancing their operations and attracting more customers, most do not have the necessary finance required to achieve this goal. Moreover, funds are not as easily available to small companies as they are to larger enterprises.
American Express’ Merchant Financing, being a specialist in providing funds for short-term investments, can aid these small businesses as it offers loans that can be paid back over a period of one year. Through its association with American Express, Heartland intends to give its clients access to competitive loans and drive growth going forward.
Heartland has been focused on providing solutions to enhance operating leverage and improve the profitability of its clients. We believe the above agreement is on par with this strategy of Heartland. The tie-up with American Express should help the payment processor retain its existing client base and maintain its growth momentum in coming quarters.
Heartland currently carries a Zacks Rank #3 (Hold). Among other financial transaction service providers, MasterCard Inc. (MA) and Global Payments Inc. (GPN) carry a Zacks Rank #2 (Buy). American Express also holds a Zacks Rank #2 (Buy).