Ingram Micro Looks To POS Merchant Services, Security With Acquisition Of The Phoenix Group

Distributor Ingram Micro Tuesday unveiled the acquisition of The Phoenix Group, a specialty distributor of point-of-sales technology with a focus on the integration of security into point-of-sales devices and infrastructure.

The acquisition follows a similar move by Greenville, S.C.-based distributor ScanSource, which in June acquired POS Portal, a specialist distributor of point-of-sale services for SMB merchants.

The Phoenix Group, with headquarters in St. Louis and Toronto, Ontario, brings with it a number of important technologies and new channel relationships, said Jeff Yelton, vice president and general manager of specialty technologies for Irvine, Calif.-based Ingram Micro.

[Related: ScanSource To Buy SMB Payment Devices Distributor POS Portal For Up To $158M]

The primary technology is key injection, which adds encryption to data at the point of sales when a consumer uses a credit or debit card, Yelton told CRN.

Key injection is an important security component of merchant services, which enable businesses to accept encrypted payments from credit or debit card users, he said.

"Credit card companies created rules and regulations around the PCI, or payment card industry, data security standard," he said. "Point of sales is becoming complex, with a lot of security. The Phoenix Group is one of the best with key injection."

Scott Rutledge, CEO and founder of The Phoenix Group, told CRN that his company has over 500 keys, making it one of the largest key generators in the country and a supplier of keys to banks and ISO, or independent sales organizations. ISOs in the point-of-sales market are the equivalent of solution providers in the IT market, Rutledge said.

The Phoenix Group supports banks and ISOs with their merchant boarding by loading and deploying the key injection technology in point-of-sales systems before shipping, Rutledge said. The company is the leading distributor for POS systems from San Jose, Calif.-based Verifone; Jacksonville, Fla.-based Pax Technology; Paris, France-based Ingenico Group; and others, he said.

The Phoenix Group also brings mobile payments technology to a market where mobile devices are increasingly integrated with POS terminals and cash registers, Rutledge said. "We've seen the need to integrate different devices with P2PE [point-to-point encryption]," he said. "This has become a fragmented market."

The acquisition brings Ingram Micro a new set of channel partners, including banks and ISOs, Yelton said. "It lets us take our cloud offerings and other services to the ISOs," he said. "And it lets us bring secure payment technology to other Ingram Micro partners."

Ingram Micro is no stranger to the point-of-sales market. It formally entered the POS business with its 2004 acquisition of Nimax, a specialty distributor of AIDC/POS, bar-code and wireless products and enterprise mobility solutions. Yelton said that acquisition did not bring skills around electronics payments and services.

"Specific skills related to payments is something we need to stay ahead of industry trends," he said.

However, with its acquisition of The Phoenix Group, Ingram Micro will directly compete with ScanSource and its POS Portal business. Rutledge said the POS Portal and Phoenix products lines are similar, although the two companies have different channel strategies.

Ingram Micro declined to discuss how much it paid for The Phoenix Group.

However, Rutledge said, The Phoenix Group has been a profitable company with year-over-year growth since it was founded 16 years ago.

Rutledge said he plans to remain with Ingram Micro to help both sides take advantage of the acquisition to grow the business. "This is an industry with a lot of dynamic change going on," he said. "We really want to make an impact as the industry changes."