RIP Leaf: Heartland Halts Payment-Tech Provider in Consolidation
Restaurant checkout-tech provider Leaf, which has been a unit of payments processing company Heartland Payment Systems since 2014, is being shuttered as Heartland looks for a new direction in the fast-changing world of retail payments.
Heartland announced the shift as part of its quarterly earnings earlier this month. The Princeton, NJ-based company said it was acquiring two more point-of-sale providers, Dinerware and pcAmerica, and putting them into a newly formed unit called Heartland Commerce.
Dinerware and pcAmerica are already working on their own cloud-based order and checkout systems, Heartland said, and those efforts “overlap with what is being developed by Leaf; consequently, Heartland decided that it will stop (point-of-sale) development efforts at Leaf.”
Heartland said that it was recording a loss of $41.4 million as a result of the change. That charge includes the reduced values of Leaf and Heartland’s in-house software, called Prosper, along with a $4 million write-down of Heartland’s investment in Austin, TX-based payments startup TabbedOut.
Sarah McCrary, the Heartland manager who took the CEO role at Leaf after co-founder Aron Schwarzkopf left the company, declined to comment on the change. But a Heartland spokeswoman told The Boston Globe that the Leaf office in Cambridge, MA’s Kendall Square would close this year in a consolidation of Heartland’s Boston-area office space.
Leaf’s end is not too surprising. The company had been losing money for a long time, which isn’t unusual for a startup trying to get to a bigger footprint. But the physical-world payments sector has been a bruising one for entrepreneurs and investors in the past few years, as businesses try to figure out how the mobile computing revolution will change the way consumers buy things at grocery stores, restaurants, and other local merchants.
Apple Pay appears to have broken that logjam on the consumer side, with big-name retailers and payment networks jumping on board for its smartphone-based digital wallet initiative. Other major mobile players like Google and Samsung have now jumped into the same lane with renewed vigor.
The retailer side of the equation still isn’t necessarily solved, and it’s reasonable to think that the software and devices most merchants use will be getting a modern upgrade as mobile payments progress. Well-funded startup Square is one to watch here, and it looks like Heartland isn’t giving up on its bid to be a player in this new reality. But it also looks like the actual tablet-based system developed by Leaf won’t be a centerpiece of that effort.