A company that got its start 20 years ago as a supplier of accounting software made its mark in the acquiring business this year by buying all or part of five merchant portfolios. And the sprees not over.
Intrix Technology Inc., which now owns thousands of merchant accounts with combined transactions of more than $1 billion annually, wants to keep acquiring portfolios, says CEO Jeff Connors.
Were buying portfolios of a hundred merchants to 10,000, Connors says.
The Intrix foray into merchant services began in a back-handed way. The company created a gateway and then decided to offer transactions because merchants want the two services integrated.
To get started as an ISO, it acquired the 2,000 merchants of Colorado-based Epic Processing Limited in 2011. It moved unhappy former Epic customers to the Intrix gateway and services, while keeping satisfied former Epic clients on their old systems.
Why disrupt a customer? Connors reasons.
After that, the acquisitiveness accelerated. Early this year, Intrix announced that it had retained PayEx LLC, a payments industry consulting company, to help devise an acquisition strategy.
As the year unfolded, the company acquired all or part of Merchant Processing USA of Southfield, Mich.; uProfit Payments of Plano, Texas; Centauris Solutions of Denver; Choice Bankcard Solutions of California; and the portfolio of a sales agent Connors declined to name.
The acquisitions tend to fall into three categories, Connors says. When ISOs simply want to leave the acquiring industry, Intrix buys the company or the entire portfolio so the seller can retire or move on. Other ISOs want to slow down but still sign up a merchant occasionally, and theyre permitted to stay active if they commit to an agreed-upon level of business. Some ISOs want to become part of a bigger company but find it difficult to raise the capital, so they sell their business but stay on as full-time Intrix employees.
We try to be flexible, but we have to be realistic, he says of the third category of potential employees. We already have a head of sales at Intrix.
Overall, the company maintains good relations with the former owners of the firms it has acquired, Connors says.
And if Intrix takes over an ISO that has employees, it attempts to bring them into the company, he notes.
Connors declines to say how many sales agents Intrix employs but claims that virtually all of them do a lot of business.
While some ISOs have 50 agents and 10 of them generate a significant amount of business, the Intrix model calls for a heavy commitment from 9 ½ out of 10 agents, he maintains.
Besides the in-house sales staff, the company sells through value-added resellers and software developers. It works directly with chain franchisees, franchisee associations and franchisors, but prefers to sign larger contracts with the latter.
Intrix does not use other ISOs or sub-ISOs as sales partners, but some ISOs use the companys gateway, Connors says.
Ours is a more direct model, he says of the decision not to sell through other ISOs.
The model also calls for transparency with retailers, he says, asserting that merchants feel other ISOs have cheated on rates, told lies and charged too much for payments terminals.
Those tactics leave some ISOs with attrition rates as high as 25%, while Intrix loses well under 10% of its merchants annually, Connors says.
Its part of taking a long-term view thats not based on holding onto merchants just for a two- or three-year contract, he says.
Were known for integrity, Connors maintains. Its the only thing you take to the grave.
Besides focusing on integrity, the company wants to keep growing. Thats because its difficult to reach a large enough audience to become financially viable by providing technology alone. Adding transaction services to the mix also calls for ever-higher volume because its a commodity business.
So Intrix intends to keep purchasing merchant contracts.
Were looking to do what makes the most sense, Connors says of the deals the company seeks. Were looking for opportunities. n