Iroquois Capital Group launches next venture

Nashville Business Journal, December 19, 2014, Scott Harrison – Another business line has been born at Iroquois Capital Group.

The venture is in an entirely new – and highly competitive – space for the Nashville finance company, which has started a string of portfolio companies in recent years: Electronic payment processing.

Iroquois plans to fully roll out its new company, Iroquois Merchant Services, in January, Daniel McGugin, president of IMS and managing director at Iroquois Capital, told me this week. It will be Iroquois’ ninth portfolio company, and the first in the payments industry.

In a nutshell, Iroquois’ new business will act as a vendor for retailers and businesses, providing the machine you use to swipe your credit or debit card at the check-out counter. They’ll also provide the same processing services for online and mobile purchases, including new payments such as ApplePay and Google Wallet. The firm will make a fee on each transaction.

It’s a competitive space, McGugin admits. Even in Middle Tennessee there are several existing players in the card-processing business. But McGugin thinks now is the ripe time for Iroquois to enter this market.

“There are some very strong companies” who do this, he said. “But we’re excited about getting in this business right now. With the changes in technology and recent [data] breaches, the industry is really hitting the restart button.”

McGugin feels the playing field is leveling off as government regulation will start requiring companies to process cards with new data chips and electronic payments move more and more to mobile phones (options like ApplePay, for instance). New chip technology means retailers will need new hardware to process electronic purchases, and that’s where Iroquois Merchant Services comes in, McGugin said.

There’s an added focus too on security, McGugin said, pointing to recent big data breaches at Home Depot and Target.

“In this business, everybody is a possible client,” McGugin said. “We’re fully committed to being a nationwide company … but we have some natural markets where we’ve had existing relationships with [Iroquois’] other companies.”

Nashville is naturally the company’s primary focus, McGugin said. But he pointed to northeast Ohio, where Iroquois opened an office this year, and the Dallas area as two other “natural markets.”

“We see this as a long-term play,” McGugin added. “The fundamentals of the business are attractive to what we’re doing at Iroquois.”

Founded in 2006, Iroquois’ initial specialty was investing in health care companies and other middle-market businesses, notably Nashville’s Covenant Surgical Partners, which operates more than 20 surgery centers throughout the country.

In recent years, Iroquois has diversified its mix of portfolio companies to include an investment banking group and, most recent, a captive insurance company.

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