Thursday, July 6, 2017
Greenville, S.C.-based ScanSource has 43 locations globally. It specializes in POS and barcode reader, security and communications products, as well as cloud and telecom services for mid-market and enterprise merchants. Sacramento, Calif.-based POS Portal, with a second deployment center in Louisville, Ky., offers POS equipment, key injection and on-demand, cloud-based solutions for small and midsize businesses (SMBs).
"We've done 27 acquisitions over the history of our company, since 1992, and they usually revolve around getting into new technologies or new geographies," said Paul Constantine, Co-President, Worldwide Barcode, Networking and Security and President, ScanSource POS and Barcode, U.S. "We typically like to find the number one player, and POS Portal obviously fit that profile as a premium company that could really enhance our mutual positions in this market."
According to Constantine, seeing an opportunity in the POS market, ScanSource invested internally on this segment. At the same time, it engaged POS Portal in discussions about joining forces. Several factors played into the timing of the acquisition, the after effects of the U.S. EMV (Europay, Mastercard and Visa) migration being one of them.
"Merchants accustomed to seeing transaction data interact with their POS didn't want to lose that, so there came to be a need to connect that EMV terminal into the software the merchant was running," said Kent "Buzz" Stryker, co-founder, President and Chief Executive Officer of POS Portal. "That opened up this upstream market segment of merchants, larger merchants, not just SMBs."
According to Stryker, EMV created demand in the mid-market for payment terminals, which ScanSource serves, along with the ability to configure and ship these highly complicated terminals, where POS Portal has expertise.
"The large national enterprise merchants went out and got their solutions in place," Stryker said. "The SMB merchants were able to get an EMV-capable countertop terminal very quickly, but for the middle part of the market it's taken a few years for the technical rails to be developed for the transaction to go down."
POS Portal brings tangible assets from the technical perspective. "We've very laboriously over the past 17 years accumulated a large library of data and debit keys based on all of our large relationships with acquirers and various midsize ISOs and agents, and that takes a long time to develop," Stryker said.
He added that with today's more complex POS systems you not only have to collect the data and debit keys and all of the terminal applications, but you also have to validate those and that you're ready to support them. POS Portal has hundreds of terminal applications in its library, many of which are active on an ongoing basis as orders come in, requiring advanced skills to ensure secure terminal configuration.
"When EMV and semi-integrated came to market for security reasons with respect to terminals, we wanted to have relationships with all of the VARs of ScanSource," Stryker said, noting that ScanSource also offers a broader selection of hardware, which is critical for merchants migrating to semi-integrated EMV terminals or EMV-integrated tablet solutions. POS Portal has sourced manufacturers to fulfill both options in recent years.
"We value specialization at ScanSource," Constantine said. "We are a specialty distributor. The way we're structured and organized is that we're a lot of specialty distributors under one umbrella, and this is another specialization that we can plug into our organization."
At this point POS Portal will continue to operate independently under its own name and plans to retain core staff at both facilities. The acquisition is expected to close in the third quarter of 2017, pending regulatory approvals.
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