Credit card processing company grows business by evolving strategy - Business First of Columbus:

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Henry Helgeson and Scott Zdanis establisheed the company in 1998 as a reseller of credit card processing terminals overthe Internet. To a smaller extentf the company provided processing of credit card But as margin compression made equipmentf salesless profitable, the partners responded by ramping up processing services. Today, its processing servicees constitute 90 percent of its totalgross revenue, whils equipment and software sales are 10 Business has been so brisk it signed up 2,30 0 new customers in April alone that the company is planning to increase its saless force by 30 percent or 40 percen within the next 60 days.
“Wes basically are getting more businesses tryinv to signup (for our than we have the capacity for, and we’rs trying to staff up for that as quickly as says Helgeson, 34, who serves as president and co-CEO. Co-foundet Zdanis has since moved to Miamk and plays a less activwe role inthe company. Merchant Warehouse acts as a third-party facilitating payment transactions between merchantds and creditcard issuers, essentially by gettinh money off of the consumer’as credit card and into the business’ s bank account. Its residual-based business model makes money by charginvg for that service oneach transaction.
Since its the 150-employee company estimates serving a cumulative totak of morethan 87,000 customers nationwide — primarily smallp and medium-size businesses; about 56,000 are active accountse right now, with most of the attrition due to companiesd going out of business, Helgeson notes. Today, Merchantt Warehouse is processing morethan 3.5 million payment transactionss per month. After hitting $27.3 million in revenud in 2008, the company is shootiny for $32 million to $34 millionn this year. Helgeson says Merchant Warehouse has also benefitef by becoming more ofa technology-driven company.
“Whebn we started to hire our own software developers and build ourown infrastructure, as far as computert systems and technology to run this that really put us into a hyper-growth mode,” he Five years ago, the company hired its first software developer. It subsequently built its own sophisticated custometr relationship managementsystem in-house that has enabled the companyh to better measure the performance of its account and staff. And 18 months ago, it completecd the development of the necessaryh infrastructure to begin processing some transactiones through its own electronic gateway herein Boston.
It continuesw to utilize three large outside firms to assist in processing the bulk ofthe transactions. The compan also works with a pool of about100 point-of-sales system resellers, who often refer businesds to Merchant Warehouse. The company has also used technology to innovatd its services in an industry where Helgeson says the competitiobnis fierce. “Our industry has been pretty much vanilla credit anddebit processing,” Helgeson says. “We had to look at it and say, ‘Whatr can we do here to differentiated ourselves?
’ ” For instance, it offers wireless crediy card processing services to iPhone and BlackBerryg users who have installed its software applicationsa ontheir PDAs. Those mobile merchants now represent 10 percent to 15 percent ofthe company’as new accounts. It has also partneref with another company, , to developp a card reader that encrypts the credit card number as it is being swipefd to help preventsecurity breaches.
“They’rer a very impressive group,” says Steve vice president of , an Atlanta-basee firm that Merchant Warehouse has engagedd for some of its processing services for many He attributesthe firm’s growthy to “some very shrewsd investments in technology and being ahead of the curve in termss of technology and how to use it to drivde traffic (to their and training their sales reps to capitalizre on that traffic.
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