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

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Henry Helgeson and Scott Zdanisa established the company in 1998 as a reseller of credit card processintg terminals overthe Internet. To a smaller extent the company provided processing of crediytcard transactions. But as margin compression made equipmeny salesless profitable, the partners responded by rampinvg up processing services. its processing services constitute 90 percent of its totalgross revenue, while equipment and softwar sales are 10 Business has been so brisk — it signed up 2,300 new customerzs in April alone that the company is planning to increase its sales forced by 30 percent or 40 percent withihn the next 60 days.
“We basically are gettinfg more businesses trying to signup (for our than we have the capacity for, and we’rer trying to staff up for that as quickly as says Helgeson, 34, who serveds as president and co-CEO. Co-founder Zdani s has since moved to Miam i and plays a less activ role inthe company. Merchant Warehousde acts as a third-party processor, facilitating payment transactions betweenm merchants and creditcard issuers, essentially by getting mone y off of the consumer’s credit card and into the business’ds bank account.
Its residual-based business model makees money by charging for that service on each Sinceits inception, the 150-employe company estimates serving a cumulative total of more than 87,00p customers nationwide — primarily small and medium-size businesses; about 56,000 are active accounts righr now, with most of the attrition due to companies goingb out of business, Helgeson notes. Today, Merchany Warehouse is processing morethan 3.5 milliobn payment transactions per month. After hitting $27.
million in revenue in 2008, the company is shootinh for $32 million to $34 million this Helgeson says Merchant Warehouse has also benefited by becoming more ofa technology-driven “When we started to hire our own softwarwe developers and build our own as far as computer systems and technologu to run this that really put us into a hyper-growth he says. Five years ago, the companhy hired its first software developer. It subsequently built its own sophisticated customedr relationship managementsystem in-house that has enabled the company to better measure the performance of its accountas and staff.
And 18 months ago, it completed the development of the necessary infrastructure to beginm processing some transactions through its own electronidc gateway herein Boston. It continuess to utilize three large outside firma to assist in processing the bulk ofthe transactions. The companty also works with a pool of aboutf100 point-of-sale system resellers, who often refef business to Merchant Warehouse. The company has also used technologhy to innovate its services in an industry where Helgesomn says the competitionis fierce.
“Our industrgy has been pretty much plain, vanills credit and debit processing,” Helgeson “We had to look at it and say, ‘Wha t can we do here to differentiatwe ourselves?’ ” For instance, it offers wirelessw credit card processing services to iPhonde and BlackBerry users who have installed its softwared applications ontheir PDAs. Those mobile merchants now representy 10 percent to 15 percent ofthe company’e new accounts. It has also partnered with another company, , to developl a card reader that encrypts the creditr card number as it is being swipedf to help preventsecurity breaches.
“They’ree a very impressive group,” says Stevs Parks, vice president of , an Atlanta-based firm that Merchantr Warehouse has engaged for some of its processin services formany years. He attributes the firm’s growth to “somwe very shrewd investments in technology and beingy ahead of the curve in terms of technologty and how to use it to drivetraffivc (to their business), and training their sales reps to capitalize on that traffic.
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