Complete, connected, independent POS provider

The Phoenix Group is North America's largest independent distributor of POS terminals, providing terminal services that include supply, deployment, encryption, software updates, repair, replacement and more - at optimal prices, according to TPG founder and Chief Executive Officer Scott Rutledge.

The company works exclusively with ISOs and banks that sell merchant services, and it serves customers in both the United States and in Canada. "That's important because many of our customers have clients across borders," Rutledge said.

Rutledge pointed out that TGP has "very strong ties" with the major terminal manufacturers - including VeriFone Inc., Equinox Payments LLC, Ingenico SA, RDM Corp., MagTek Inc. and others - that set the company apart as a provider of comprehensive, terminal-based services at scaled pricing.

Any type of terminal or terminal-related service or accessory sold by these brands is sold by TPG, he said. The company's terminals include conventional models, wireless terminals, and virtual and mobile models, along with options for built-in POS technology now taking hold, for example, Europay/MasterCard/Visa (EMV) and near field communication readers.

"We know from history that there are customers out there that don't have great ties to manufacturers or visibility of what's going on down the line," Rutledge said. "A lot of people talk about strong manufacturing relationships, but we have 12 years of history proving it.

"It's a wide-open relationship; the more we do business together with our customers, the more exposure they'll have to market pricing, EMV, encryption, security and everything that's currently out there."

Calling the shots

According to Rutledge, TPG operates completely independently. It is not partnered with a particular processor, and it is not owned or operated by an outside investor or venture capitalist. This means TPG can seek the best possible services and deals for its merchant customers because it is not in league with a particular distributor or business interest, he said.

"I own 100 percent of the company," Rutledge said. "We always keep our goals in line with our customers versus chasing down what a specific processor might want or board of directors might be interested in."

Another advantage Rutledge pointed out is that the company performs all of its services autonomously: clients who need repair, upgrades or other types of help get assistance directly from TPG. "We do everything in house, so it doesn't go back to the OEMs," he said. "With competitors, if there's a warranty, repair or legacy issue, they have to send the terminals back to the manufacturer, who has to send them to Mexico or somewhere else to get them repaired. We do all of that in-house."

Rutledge stressed that despite the company's independent status, TPG leverages its strong relationships with the major manufacturers to keep its clients up to speed on new technology and informed of their different product and pricing options. "We'll partner with our customer and bring the manufacturer in to talk about new products and everything there is on the market," he said.

Rutledge added that TPG's prices on terminals are highly competitive, even compared with the distributors themselves. "We're known for being aggressive on pricing; because of our volume, we're able to buy at costs lower than most others.

If you want a good deal on a Sony [television], you go to BestBuy, not Sony," he said. "Our equipment pricing is going to be better than if you bought it from the [manufacturers]."

Offering complete POS services

TPG was founded in 2001 as a terminal distributor. It began adding other services in 2003, and by 2004, was a full-service provider, according to Rutledge.

In addition to supplying equipment, the company's services include terminal deployment, repairs, supplies and accessories, overnight replacements, software upgrades, encryption, key injection, PIN entry device signing, phone assistance and billing.

Rutledge said TPG's services platform was bolstered in 2010 when it acquired the Total System Services Inc. (TSYS) subsidiary, TSYS POS Systems and Services LLC.

"TSYS had some front-end software we didn't have that allowed customers a very robust order entry platform," Rutledge said. "It gave us a really nice platform with full visibility on all orders, equipment, repairs, deployments." He added that customers who conduct business with TPG can do so entirely online, though they have the option of phone assistance as well.

The company's repair and replacement service is more comprehensive than what the typical warranty offers, Rutledge said. He called it an "all-encompassing asset protection plan" that covers not only product defects or malfunctions, but also things like breakage and spills.

"If it surges, or if there's a spill or drop, card reader doesn't work - whatever - you get a brand new terminal for zero out of pocket cost," he said. He noted that the program costs $7 a year and covers all costs related to replacement or repair, including shipment costs.

He said the protection plan is great for reducing attrition since merchants that don't want to pay several hundred dollars to replace a terminal - in the event it is broken for reasons not covered by traditional warranty - will commonly leave their ISO for another one to avoid that layout of cash.

TPG is an authorized repair facility, meaning that the terminal manufacturers with which it has partnered have all certified it as a repair service for their respective machines. "They come in and inspect, and you pay fees to have that factory authorization," Rutledge said.

"The difference is you can change the oil on my car if you're not an authorized [car dealership], but if you're authorized you can do whatever needs to be done on that car.

"We have the backing of the manufacturer as opposed to, 'we're just gonna poke around in the terminal,'" he added. "A lot of competitors don't have the same training to do repair.

"They don't support all the brands, maybe one or two models, while we support everything they put out. In warranty or out of warranty, defects problems, all of it - we handle it all."

Working with ISOs

TPG keeps about $10 million of inventory on hand at any given time, Rutledge said. "When people want products, we can handle anyone's needs at any time at whatever volume they're looking for," he said, adding that the company has thousands of products and can incorporate any specific program an ISO asks for through software integration.

"When we contract with an ISO, if they have a gift card program or specialty program, we'll load whatever they want," he said.

He said billing options for ISOs and merchants are flexible. Merchants can pay for terminals and related services either upfront or with installments made over periods of six to 12 months.

Also, ISOs can either bill the merchant for products and services or turn the billing over to TPG, which docks the merchant's account with an automated clearing house payment and then redirects whatever money is owed to the ISO. "Anyway we can facilitate the transaction, we'll do it," Rutledge said.

He noted that ISOs can choose how much they want to mark up the price of products and services; markups vary from a substantial percentage of the wholesale cost down to nothing. Some ISOs use TPG's products to simply increase retention while others seek additional revenue, he said.

"I don't think there is a general number ISOs typically want out of their sale," Rutledge said. "Some will say I want to sell this at [a certain dollar amount or percentage over the wholesale cost], while others will say I want to keep this as low as I can."

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