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August 4,
2005

Josh Forgione

Division of Corporate Finance

Securities and Exchange Commission

Mail Stop 0409

450 Fifth Street, N.W.

Washington, D.C. 20549-0306

Re:         Heartland Payment
Systems, Inc.

Registration Statement on Form S-1 (333-118073)

Dear Mr. Forgione:

On behalf of our client,
Heartland Payment Systems, Inc. (the “Company”) and pursuant to our
conversation last week, we are attaching herewith for your preliminary review
the “Recent Developments” section that the Company proposes to include in
Amendment No. 6 (“Amendment No. 6”) to the Company’s Registration
Statement on Form S-1 (File No. 333-118073) (the “Registration
Statement”) on Monday August 8, 2005.
We would propose to include the new section in Management’s
Discussion and Analysis of Financial Condition and Results of Operations after
the discussion of New Accounting Standards on page 39.

Although we had
originally discussed including financial information that would normally be
included in an earnings release, the Company has been able to provide more
fulsome disclosure in the “Recent Developments” section than originally
anticipated.  However, the Company and
the Company’s Chief Financial Officer and Chief Executive Officer are still
reviewing the financial information in the Form 10-Q and the related
footnotes.  The Company expects this
review to be finalized upon completion of the road show.  Consequently, the Company does not expect to
be able file the Form 10-Q for the quarter ended June 30, 2005
until Monday, August 15, 2005.

We greatly appreciate
your agreeing to review and provide comments on the attached prior to our
filing of Amendment No. 6.  If you
have any further questions or need any further information regarding this
filing, please contact the undersigned at (212) 415-9215 or Kevin T.
Collins at (212) 415-9319.

  Sincerely,

  Nanci I. Prado

Recent Developments — Operating Results for the Three and Six Months
Ended June 30, 2005

We have not yet finalized
our financial statement close process for the quarter ended June 30, 2005.
During the course of this process, we may identify items that would require us
to make adjustments to our preliminary operating results discussed below. We
have developed our preliminary operating results by reviewing our books and
records in connection with our preparation of our quarterly report on Form 10-Q
for the quarter ended June 30, 2005 by applying the same critical
accounting policies which we applied in developing our historical financial
statements and which are described in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations — Critical Accounting Policies.”
However, we cannot assure you that our final results for the three and six
month-periods ended June 30, 2005 will be consistent with those discussed
below. As a result, the below discussion constitutes forward-looking statements
and, therefore, we caution you that these statements are subject to risks and
uncertainties, including possible adjustments to our preliminary operating
results described above and those described under “Risk Factors” in this
prospectus. We intend to file our June 30, 2005 quarterly report on Form 10-Q
on August 15, 2005, which will contain our final results for the three and
six month-periods ended June 30, 2005.
Consequently, we do not intend to furnish updated preliminary operating
results.

Overview

For the three months ended June 30,
2005, we recorded net income of $4.4 million, a 128.1%, increase over net
income of $1.9 million recorded for the three months ended June 30, 2004.
Our processing volume for the three months ended June 30, 2005 increased
by 37.1% to $8.5 billion, compared to $6.2 billion for the three months ended June 30,
2004. Primarily as a result of the increase in processing volume, our total net
revenue for the three months ended June 30, 2005 increased by $60.4
million, or 40.5%, to $209.7 million, from net revenue of  $149.3 million for the three months ended June 30,
2004. The processing volume increase reflects the cumulative benefit of the net
addition of new merchant accounts from 2004 to 2005, while the faster growth in
net revenues also reflects interchange increases by Visa and MasterCard, which
we pass through to our merchants. As of June 30, 2005, we processed
transactions for 101,500 merchant locations, a 28.5% increase from the 79,000
merchant locations processed as of June 30, 2004.

For the six months ended June 30, 2005, we recorded net income of
$7.1 million, a 74.0%, increase over net income of $4.1 million recorded for
the six months ended June 30, 2004. Our processing volume increased by
36.3%, from $11.3 billion in the six months ended June 30, 2004 to $15.4
billion for the six months ended June 30, 2005. Our total net revenue for
the six months ended June 30, 2005 increased by $109.1 million, or 40.3%,
to $379.6 million, from net revenue of
$270.5 million for the six months ended June 30, 2004.

Diluted net income per share, based on 35,616,000 diluted shares, was
$0.12 for the three months ended June 30, 2005 compared to $0.05, based on
33,032,000 diluted shares, for the three months ended June 30, 2004. For
the six months ended June 30, 2005, diluted net income per share based on
35,344,000 diluted shares, was $0.20, compared to $0.12, based on 33,297,000
diluted shares, for the prior year six-months ended June 30, 2004.

Total stockholders’ equity at June 30, 2005 was $13.3 million, a
$7.2 million, or 117.7%, increase over stockholders’ equity at December 31,
2004. On July 26, 2005, our board of directors and stockholders approved
a two-for-one stock split of our common stock. All common shares, per share and
conversion amounts related to stock options, warrants and convertible
participating preferred stock have been adjusted to reflect the stock split for
all periods presented. The Board of Directors and stockholders also increased
the number of authorized shares of common stock to 100,000,000 and the number
of shares authorized under our 2000 Equity Incentive Plan to 11,000,000.

Three Months Ended June 30, 2005 Compared to Three Months Ended June 30,
2004

The following table shows certain income statement data as a percentage
of revenue for the periods indicated (in thousands of dollars):

  Three
  Months

  Ended June 30, 2005

  % of Total

  Net

  Revenue

  Three
  Months

  Ended June 30, 2004

  % of
  Total

  Net

  Revenue

  Change

  Amount

  %

  Revenue:

  Gross processing
  revenue

  $

  206,728

  98.6

  %

  $

   147,693

  98.9

  %

  $

   59,035

  40.0

  %

  Other revenue,
  net

  2,963

  1.4

  %

  1,604

  1.1

  %

  1,359

  84.7

  %

  Total net revenue

  209,691

  100.0

  %

  149,297

  100.0

  %

  60,394

  40.5

  %

  Costs of
  Services:

  Interchange

  153,134

  73.0

  %

  109,074

  73.1

  %

  44,060

  40.4

  %

  Dues and
  assessments

  7,899

  3.8

  %

  5,749

  3.9

  %

  2,150

  37.4

  %

  Processing and
  servicing

  22,532

  10.7

  %

  16,868

  11.3

  %

  5,664

  33.6

  %

  Customer
  acquisition costs

  7,400

  3.5

  %

  5,327

  3.6

  %

  2,073

  38.9

  %

  Depreciation and
  amortization

  1,326

  0.6

  %

  993

  0.7

  %

  333

  33.5

  %

  Total costs of
  services

  192,291

  91.7

  %

  138,011

  92.4

  %

  54,280

  39.3

  %

  Selling and
  administrative

  9,290

  4.4

  %

  7,427

  5.0

  %

  1,863

  25.1

  %

  Total expenses

  201,581

  96.1

  %

  145,438

  97.4

  %

  56,143

  38.6

  %

  Income from
  operations

  8,110

  3.9

  %

  3,859

  2.6

  %

  4,251

  110.2

  %

  Other income
  (expense):

  Interest income

  111

  0.1

  %

  42

  —

  69

  164.3

  %

  Interest expense

  (538

  )

  (0.3

  )%

  (315

  )

  (0.2

  )%

  (223

  )

  (70.8

  )%

  Fair value
  adjustment for warrants with mandatory redemption provisions

  (202

  )

  (0.1

  )%

  (211

  )

  (0.1

  )%

  9

  4.3

  %

  Other, net

  (28

  )

  —

  —

  —

  (28

  )

  —

  Total other
  income (expense)

  (657

  )

  (0.3

  )%

  (484

  )

  (0.3

  )%

  (173

  )

  (35.7

  )%

  Income before
  income taxes

  7,453

  3.6

  %

  3,375

  2.3

  %

  4,078

  120.8

  %

  Provision for
  income taxes

  3,072

  1.5

  %

  1,454

  1.0

  %

  1,618

  111.3

  %

  Net income

  $

   4,381

  2.1

  %

  $

   1,921

  1.3

  %

  $

   2,460

  128.1

  %

Revenue.   Total net revenue
increased 40.5% from $149.3 million for the three months ended June 30,
2004 to $209.7 million for the three months ended June 30, 2005, primarily
as a result of a 40.0% increase in our gross processing revenue from $147.7
million for the three months ended June 30, 2004 to $206.7 million for the
three months ended June 30, 2005. Our processing volume for the three
months ended June 30, 2005 increased 37.1% to $8.5 billion, compared to
$6.2 billion for the three months ended June 30, 2004. These increases in
gross processing revenue and processing volume were primarily attributable to a
net increase in merchant accounts, with the number of merchant accounts growing
by 28.5% from 79,000 as of June 30, 2004 to 101,500 as of June 30,
2005. The increase in new merchant accounts during this period was primarily
the result of the growth in our sales force, combined with improved production
from our existing sales force. The sales force grew by 14.2% from 789 at June 30,
2004 to 901 at June 30, 2005. Gross processing revenue also includes
payroll processing fees, which increased by 25.0% from $0.8 million for the
three months ended June 30, 2004 to $1.0 million for the three months
ended June 30, 2005. Total net revenue also includes other revenue, net
which increased by 84.7% from $1.6 million for the three months ended June 30,
2004 to $3.0 million for the three months ended June 30, 2005. The
increase in other revenue was primarily due to increases in annual fees, and
equipment related income.

Costs of services.  Costs of services
increased 39.3% from $138.0 million for the three months ended June 30,
2004 to $192.3 million for the three months ended June 30, 2005 due
primarily to an

increase in interchange fees,
which resulted from higher processing volume. Cost of services represented
91.7% and 92.4% of total net revenue for the three months ended June 30,
2005 and 2004, respectively. Interchange fees represented 73.0% of total net
revenue for the three months ended June 30, 2005 and 73.1% of total net
revenue for the three months ended June 30, 2004. Dues and assessments
increased 37.4% from $5.7 million for the three months ended June 30, 2004
to $7.9 million for the three months ended June 30, 2005 due to the
increased processing volume. As a percentage of total net revenue, dues and
assessments declined from 3.9% to 3.8% for the three months ended June 30,
2004 and 2005, respectively.

Processing and servicing expense increased by $5.7 million, or 33.6%,
in the three months ended June 30, 2005 compared to the three months ended
June 30, 2004 and as a percentage of total net revenue declined from 11.3%
for the three months ended June 30, 2004 to 10.7% for the three months
ended June 30, 2005. The increase in processing and servicing expense was
due primarily to costs associated with increased volume, a $1.7 million
increase in residual commission payments to our Relationship Managers and sales
managers related to their portion of the growth in our gross margin, and the
addition of 26 sales, risk and underwriting support personnel in the service
center. Since our sales organization is 100% commission-based, increases in
processing income directly impact commissions in cost of services. Processing
and servicing as a percentage of total net revenue decreased primarily due to
improved merchant pricing, leveraging the lower costs of our internally
developed front-end processing system, HPS Exchange, and growth in our services
center staff that was slower than our revenue growth. Over 65% of new merchants
installed during the three months ended June 30, 2005 were installed on
HPS Exchange, and we have completed some conversions from other front-end
processors, so that HPS Exchange represented approximately 43% of our total
processing volume for the three months ended June 30, 2005, up from 33%
for the three months ended June 30, 2004. We expect the increasing share
of HPS Exchange in our total merchant base to continue in the future. Included
in processing and servicing expense was $43,000 of payroll processing costs for
the three months ended June 30, 2005, which increased 2.4% from $42,000
for the three months ended June 30, 2004.

Customer
acquisition costs increased 38.9% from $5.3 million for the three months ended June 30,
2004 to $7.4 million for the three months ended June 30, 2005. The amortization of signing bonuses
increased from $2.8 million for the three months ended June 30,
2004 to $3.4 million for the three months ended June 30, 2005, while the accrued buyout cost amortization
grew from $1.8 million for the three months ended June 30, 2004 to
$2.5 million for the three months ended June 30, 2005. Increases in new merchant account
generation activity, as reflected by signing bonus payments, which increased
from $5.4 million for the three months ended June 30, 2004 to $5.7
million for the three months ended June 30, 2005, were responsible for increases in the amortization of both the
accrued buyout costs and signing bonuses.

Depreciation
and amortization expenses increased 33.5% from $1.0 million for the three
months ended June 30, 2004 to $1.3 million for the three months
ended June 30, 2005. The
increase was primarily due to the purchase of information technology equipment
to support the network and the development of HPS Exchange. Additionally, we
capitalized salaries and fringe benefits and other expenses incurred by
employees that worked on internally developed software projects. Amortization
does not begin on the internally developed software until the project is
complete and placed in service, at which time we begin to amortize the asset
over three years. The capitalized amounts decreased from $455,000 for the three
months ended June 30, 2004
to $410,000 for the three months ended June 30, 2005. The total amount of capitalized
projects placed in service for the three months ended June 30, 2005 and 2004 was $415,000 and $43,000,
respectively.

Selling and administrative.   Selling
and administrative expenses increased 25.1% from $7.4 million for the three
months ended June 30, 2004 to $9.3 million for the three months ended June 30,
2005. The increase was primarily due to added costs necessary to continue
building our corporate and marketing infrastructure to meet our sales
initiatives. Selling and administrative expenses as a percentage of total net
revenue declined from 5.0% for the three months ended June 30, 2004 to
4.4% for the three months ended June 30, 2005, as revenue growth outpaced
the increase in expenses. Our payroll operation’s selling and administrative
expenses increased by 14.3% from $447,000 for the three months ended June 30,
2004 to $511,000 for the three months ended June 30, 2005.

Income
from operations.  For the reasons described above, income
from operations improved from $3.9 million for the three months ended June 30,
2004 to $8.1 million for the three months ended June 30, 2005

Interest income.   Interest income increased from $42,000 to $111,000 in
the three months ended June 30, 2004 and 2005, respectively, due primarily to
increased interest rates.

Interest expense.   Interest expense increased from $315,000 for the three
months ended June 30, 2004 to $538,000 for the three months
ended June 30, 2005.
Most of our interest expense arises from the fact that our sponsor bank
advances interchange fees to most of our merchants, and we pay the sponsor bank
prime rate on those ba