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

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Henry Helgeson and Scott Zdanis establishec the company in 1998 as a reseller of credit card processing terminals overthe Internet. To a smallee extent the company provided processing of credigcard transactions. But as margin compressio made equipment salesless profitable, the partnera responded by ramping up processing Today, its processing services constitute 90 percent of its totalk gross revenue, while equipment and software sales are 10 Business has been so brisj — it signed up 2,300 new customer s in April alone — that the company is planningf to increase its sales forcee by 30 percent or 40 percentt within the next 60 days.
“We basicallu are getting more businesses trying to signup (for our services) than we have the capacity for, and we’re trying to staff up for that as quickl as possible,” says Helgeson, 34, who servews as president and co-CEO. Co-founderf Zdanis has since moved to Miami and plays a less activee role inthe company. Merchant Warehoused acts as a third-party facilitating payment transactions between merchants and creditfcard issuers, essentially by getting money off of the consumer’xs credit card and into the business’z bank account.
Its residual-based business modelk makes money by charging for that service on each Sinceits inception, the 150-employee compangy estimates serving a cumulative tota l of more than 87,000 customers nationwide primarily small and medium-size businesses; about 56,000 are active accounts rightr now, with most of the attritioh due to companies going out of Helgeson notes. Today, Merchant Warehouse is processing morethan 3.5 millionj payment transactions per month. After hitting $27.3 million in revenue in 2008, the companyt is shooting for $32 million to $34 million this Helgeson says Merchant Warehouss has also benefited by becoming more ofa technology-drivejn company.
“When we started to hire our own softwared developers and build ourown infrastructure, as far as compute r systems and technology to run this that really put us into a hyper-growth mode,” he Five years ago, the company hired its firsy software developer. It subsequently built its own sophisticatedc customer relationship managementsystem in-house that has enabledc the company to better measure the performance of its accountes and staff. And 18 months ago, it completeds the development of the necessary infrastructur e to begin processing some transactions through its own electronif gateway herein Boston.
It continuess to utilize three large outside firms to assisgt in processing the bulk ofthe transactions. The companhy also works with a pool of abouyt100 point-of-sale system resellers, who often referd business to Merchant Warehouse. The companty has also used technology to innovate its services in an industry where Helgesonm says the competitionis fierce. “Our industry has been pretty much plain, vanilla creditg and debit processing,” Helgeson says. “We had to look at it and say, ‘Whag can we do here to differentiatwe ourselves?
’ ” For instance, it offers wireleszs credit card processing services to iPhone and BlackBerry users who have installerd its software applications ontheif PDAs. Those mobile merchants now represent 10 perceny to 15 percent ofthe company’s new accounts. It has also partneredc with another company, , to developl a card reader that encryptd the credit card number as it is beint swiped to help preventsecuritt breaches.
“They’re a very impressive group,” says Steve vice president of , an Atlanta-based firm that Merchan t Warehouse has engaged for some of its processing services for many He attributesthe firm’s growth to “some very shrewd investments in technology and being ahead of the curves in terms of technology and how to use it to drive traffic (to their and training their sales reps to capitalizr on that traffic.
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