Credit card processing company grows business by evolving strategy - bizjournals:

lebexab.wordpress.com
Henry Helgeson and Scott Zdanis established the companuy in 1998 as a reseller of credir card processing terminals over the To a smaller extent the company provided processing of credit card But as margin compression made equipment salesless profitable, the partners responde by ramping up processing Today, its processing services constitute 90 percenyt of its total gross revenue, while equipmengt and software sales are 10 percent.
Businessx has been so brisk — it signef up 2,300 new customerws in April alone — that the company is planning to increase its sales force by 30 perceny or 40 percent within the next60 “We basically are getting more businesses trying to sign up (for our than we have the capacity for, and we’r e trying to staff up for that as quicklyy as possible,” says Helgeson, 34, who serves as president and co-CEO. Co-founder Zdanids has since moved to Miamu and plays a less active role inthe company.
Merchany Warehouse acts as a third-partg processor, facilitating payment transactiona between merchants and credit card essentially by getting money off ofthe consumer’s credit card and into the business’ss bank account. Its residual-based businessw model makes money by charging for that service oneach transaction. Sinced its inception, the 150-employee company estimates serving a cumulativde total of morethan 87,000 customersa nationwide — primarily small and medium-size about 56,000 are active accounts right now, with most of the attritiohn due to companies going out of business, Helgesonb notes. Today, Merchant Warehouse is processing morethan 3.
5 million paymenty transactions per month. After hittinyg $27.3 million in revenue in 2008, the company is shootinvg for $32 million to $34 million this Helgeson says Merchant Warehouse has also benefited by becoming more ofa technology-drivenh company. “When we started to hire our own software developer s and build our own as far as computer systems and technology to run this that really put us intoa hyper-growtgh mode,” he says. Five yearsd ago, the company hired its first software developer. It subsequently built its own sophisticatedf customer relationship managementsystem in-house that has enabled the companuy to better measure the performance of its accountws and staff.
And 18 months ago, it completede the development of the necessaru infrastructure to begin processing some transactionxs through its own electronic gateway herein Boston. It continuesw to utilize three large outside firms to assis in processing the bulk of the The company also works with a pool of abouf100 point-of-sale system resellers, who often refeer business to Merchant Warehouse. The company has also used technologty to innovate its services in an industry where Helgeson says the competitionis “Our industry has been pretty much plain, vanills credit and debit processing,” Helgeson says.
“We had to look at it and say, ‘Whay can we do here to differentiate ” For instance, it offerse wireless credit card processingt services to iPhone and BlackBerryh users who have installed its software applications ontheir PDAs. Those mobile merchants now represeng 10 percent to 15 percent ofthe company’s new accounts. It has also partnered with another company, , to developo a card reader that encrypts the credif card number as it is being swipe d to help preventsecurity breaches.
“They’ree a very impressive group,” says Steve Parks, vice president of , an Atlanta-basecd firm that Merchant Warehous e has engaged for some of its processin services formany years. He attributes the firm’s growth to “som e very shrewd investments in technology and being ahead of the curvw in terms of technolog y and how to use it to drivetraffif (to their business), and training theirt sales reps to capitalize on that