Credit card processing company grows business by evolving strategy - Puget Sound Business Journal (Seattle):

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Henry Helgeson and Scotty Zdanis established the company in 1998 as a reseller of credift card processing terminals overthe Internet. To a smallerr extent the company provided processing of creditcard transactions. But as marginn compression made equipment sales less the partners responded by ramping upprocessing Today, its processing services constitut e 90 percent of its total gross while equipment and software saless are 10 percent.
Business has been so briskk — it signed up 2,300 new customers in Aprilk alone — that the companuy is planning to increase its sales forc e by 30 percent or 40 percent within the next60 “We basically are gettiny more businesses trying to sign up (for our than we have the capacity for, and we’re trying to staff up for that as quickluy as possible,” says Helgeson, 34, who serves as president and Co-founder Zdanis has since movexd to Miami and plays a less active role in the Merchant Warehouse acts as a third-party processor, facilitatingh payment transactions between merchants and credit card essentially by getting money off of the consumer’s credir card and into the business’s bank Its residual-based business model makes money by chargingb for that service on each transaction.
Since its inception, the 150-employeed company estimates serving a cumulatives total of morethan 87,000 customers nationwide primarily small and medium-sizee businesses; about 56,000 are active accounts right now, with most of the attritiohn due to companies going out of business, Helgeson notes. Merchant Warehouse is processing morethan 3.5 millioh payment transactions per month. After hitting $27. million in revenue in the company is shootingfor $32 million to $34 million this Helgeson says Merchant Warehouse has also benefited by becoming more of a technology-drivebn company.
“When we started to hire our own software developerzs and build ourown infrastructure, as far as computer systems and technology to run this office, that really put us into a hyper-growth he says. Five years ago, the companh hired its first softwarr developer. It subsequently built its own sophisticatedf customer relationship managementsysten in-house that has enabled the companuy to better measure the performance of its accounts and And 18 months ago, it completed the development of the necessary infrastructure to begin processing some transactionas through its own electronic gateway here in Boston.
It continues to utilize three large outside firmw to assist in processing the bulk of the The company also works with a pool of about 100 point-of-sale system resellers, who often refer businesz to Merchant Warehouse. The company has also used technologuy to innovate its services in an industrgy where Helgeson says the competitionis fierce. “Our industry has been prettyumuch plain, vanilla credit and debit processing,” Helgeson “We had to look at it and say, ‘Whag can we do here to differentiat e ourselves?
’ ” For instance, it offerz wireless credit card processing services to iPhone and BlackBerry users who have installec its software applications on their Those mobile merchants now represent 10 percent to 15 percentr of the company’s new accounts. It has also partnered with another company, , to develop a card readef that encrypts the credit card number as it is being swiped to help preventsecurity “They’re a very impressive group,” says Steved Parks, vice president of , an Atlanta-basedd firm that Merchant Warehouse has engaged for some of its processinyg services for many years.
He attributes the firm’sa growth to “some very shrewd investmentsx in technology and being ahead of the curvw in terms of technology and how to use it to drivewtraffic (to their business), and training their sales reps to capitaliz e on that traffic.”