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VeriFone says it has a new preferred reseller for point-of-sale terminals and PIN pads.
Earlier this year, San Jose, Calif.-based VeriFone Holdings Inc. named The Phoenix Group, based in O'Fallon, Mo., as its preferred reseller, replacing Rocklin, Calif.-based Tasq Technology.
First Data Corp., a Greenwood Village, Colo.-based processor, that sells its own line of payment terminals, owns Tasq. Tasq and The Phoenix Group, along with such companies as Sacramento, Calif.-based POS Portal and Sunrise, Fla.-based JR's POS Depot, specialize in selling payment devices to ISOs, which often lack the volume to buy directly from a terminal manufacturer.
Douglas G. Bergeron, VeriFone CEO, told analysts during a conference call this week regarding VeriFone's financial results that the company switched to The Phoenix Group because VeriFone wanted to "optimize" its reseller relationship. The change was made in the first quarter, according to comments made during the conference call.
The change does not mean Tasq and VeriFone have stopped working together. A First Data spokesperson says Tasq offers customers multiple hardware products at competitive prices. "To accomplish this, we currently support several terminal manufacturers, including VeriFone," she says.
"They can still buy from us," Bergeron says. "We still sell to them. It's of no secret that at the low end, they too believe it's prudent to come up with their own product."
Bergeron tells ISO&Agent Weekly that it is more efficient for VeriFone to work with The Phoenix Group as a preferred reseller because it will place orders weekly or monthly instead of quarterly. The shorter ordering period means VeriFone will order devices as needed instead of storing them in a warehouse. Bergeron calls that "linear ordering."
Scott Rutledge, The Phoenix Group president and CEO, says his 7-year-old company is committed to grossing $20 million per quarter on products sold to VeriFone and already is approaching that figure.
The Phoenix Group's position with VeriFone is based on the POS-terminal distributor meeting that number, Rutledge says. The companies are not signing a partnership agreement, and neither is invested in the other, he says.
Rutledge is not overly concerned about the nation's economic situation, though many ISOs are buying smaller quantities as they need them instead of buying large quantities and storing them.
"We get a lot more orders now than in the past," Rutledge says, "but the average-dollar size is less than it used to be."
The VeriFone reseller deal bolsters The Phoenix Group's position in the market, Rutledge says.
Bergeron says he is pleased with how the reseller arrangement is working out, despite problems in the early stages of the transition. Those issues involved a slowdown in purchasing because economic conditions meant fewer start-up businesses, he says.
"Our new preferred reseller had a very good quarter, but overall our ISO business declined," Bergeron says. "Slowing U.S. economic activity and a reduction in the number of new retailers openings were the primary factor."
VeriFone's results for the fiscal first quarter ended Jan. 31, showed a $24 million decrease in revenue for North America systems, which includes sales to ISOs, to $51.7 million compared with $75.7 million for the same quarter a year earlier. The company traced much of the decrease to the fact that $23.4 million in revenue generated by sales to The Phoenix Group could not be recognized in the first quarter and was accounted for in the second quarter, which ended April 30.
Second quarter revenue reached $84.7 million, a 2% gain from second-quarter $83.2 million during the same period last year, the company said.
