Credit card processing company grows business by evolving strategy - Triangle Business Journal:

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Henry Helgeson and Scott Zdanis established the company in 1998 as a reselle of credit card processing terminals over the To a smaller extent the company provided processing of creditcard transactions. But as margin compression made equipmen t salesless profitable, the partneres responded by ramping up processing services. Today, its processinbg services constitute 90 percent of its totalgross revenue, while equipmengt and software sales are 10 Business has been so brisko — it signed up 2,300 new customers in Aprilo alone — that the company is planningt to increase its sales force by 30 percent or 40 percen within the next 60 “We basically are getting more businesses trying to sign up (for our than we have the capacity for, and we’rs trying to staff up for that as quicklyh as possible,” says Helgeson, 34, who serves as president and Co-founder Zdanis has since moved t o Miami and plays a less active role in the Merchant Warehouse acts as a third-party processor, facilitating paymeng transactions between merchants and credit card issuers, essentially by getting mone off of the consumer’as credit card and into the business’s bank account.
Its residual-based businesws model makes money by charging for that service oneach transaction. Since its the 150-employee company estimates serving a cumulatives total of morethan 87,000 customers nationwidde — primarily small and medium-size businesses; about 56,000 are active accounts right now, with most of the attritio due to companies going out of business, Helgeson notes. Merchant Warehouse is processingb morethan 3.5 million payment transactions per After hitting $27.3 million in revenuse in 2008, the company is shootinyg for $32 million to $34 million this Helgeson says Merchant Warehouse has also benefited by becominyg more of a technology-driven company.
“When we startedx to hire our own softwarw developers and build ourown infrastructure, as far as compute r systems and technology to run this office, that really put us into a hyper-growtyh mode,” he says. Five years ago, the compangy hired its first software It subsequently built its own sophisticated customer relationshipp managementsystem in-house that has enabled the company to better measurde the performance of its accounts and And 18 months ago, it completed the development of the necessarg infrastructure to begin processingy some transactions through its own electronicx gateway here in Boston.
It continues to utilize three large outsids firms to assist in processing the bulk of the The company also works with a pool of abouf100 point-of-sale system who often refer business to Merchantf Warehouse. The company has also used technology to innovats its services in an industrh where Helgeson says the competitionis fierce. “Our industruy has been pretty much plain, vanilla credit and debitf processing,” Helgeson says. “We had to look at it and say, ‘Whatr can we do here to differentiate ourselves?
’ For instance, it offers wireless creditt card processing services to iPhonw and BlackBerry users who have installed its softward applications on their Those mobile merchants now represen t 10 percent to 15 percent ofthe company’s new It has also partnered with another company, , to develop a card readerf that encrypts the credit card number as it is bein g swiped to help prevent security breaches. “They’r a very impressive group,” says Steved Parks, vice president of , an Atlanta-base firm that Merchant Warehouse has engaged for some of its processinbg services formany years.
He attributes the firm’s growtgh to “some very shrewd investments in technology and being ahead of the curve in termx of technology and how to use it to drivetraffic (to their business), and training their salesx reps to capitalize on that