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

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Henry Helgeson and Scott Zdanis established the compant in 1998 as a reseller of credit card processing terminalx overthe Internet. To a smaller extent the companu provided processing of creditcard transactions. But as marginn compression made equipment salesless profitable, the partners responded by rampintg up processing services. Today, its processinbg services constitute 90 percen of its totalgrosse revenue, while equipment and software saled are 10 percent.
Business has been so brisok — it signed up 2,300 new customers in Aprilp alone — that the companyh is planning to increase its sales forcd by 30 percent 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’rre trying to staff up for that as quicklty as possible,” says 34, who serves as president and co-CEO.
Co-foundef Zdanis has since moved to Miamik and plays a less active role in the Merchant Warehouse acts asa third-party facilitating payment transactions betweenj merchants and credit card issuers, essentiallh by getting money off of the consumer’s creditr card and into the business’sx bank account. Its residual-based business model makes money by chargin g for that service on each Sinceits inception, the 150-employese company estimates serving a cumulative total of more than 87,00o customers nationwide — primarily small and medium-size businesses; about 56,0090 are active accounts right now, with most of the attritioh due to companies going out of Helgeson notes.
Today, Merchant Warehouses is processing morethan 3.5 millionm payment transactions per month. After hitting $27.3 million in revenue in the company is shootingfor $32 million to $34 million this Helgeson says Merchant Warehouse has also benefited by becomingb more of a technology-driven company. “When we starte to hire our own software developers and build ourown infrastructure, as far as computer systems and technology to run this office, that really put us into a hyper-growtgh mode,” he says. Five years ago, the company hired its firsy software developer.
It subsequently built its own sophisticatex customer relationship managementsystem in-housee that has enabled the company to better measure the performance of its accountes and staff. And 18 monthsx ago, it completed the development of the necessary infrastructurw to begin processing some transaction s through its own electronic gateway herein Boston. It continuesz to utilize three large outsided firms to assist in processing the bulk of the The company also works with a pool of aboutr100 point-of-sale system resellers, who often refer busines s to Merchant Warehouse. The company has also used technologuy to innovate its services in an industrhy where Helgeson says the competitionis fierce.
“Our industry has been prettt much plain, vanilla credit and debit Helgeson says. “We had to look at it and say, ‘What can we do here to differentiate ourselves?’ ” For instance, it offers wireless credit card processingy services to iPhone and BlackBerrh users who have installed its software applicationsx on their PDAs. Those mobiles merchants now represent 10 percent to 15 percen ofthe company’s new accounts. It has also partnere with another company, , to develop a card reader that encryptw the credit card number as it is beinh swiped to help preventsecurity breaches.
“They’re a very impressive group,” says Stevse Parks, vice president of , an Atlanta-baseds firm that Merchant Warehouss has engaged for some of its processingb services formany years. He attributes the firm’a growth to “some very shrewd investmentxs in technology and being aheas of the curve in termds of technology and how to use it to drivrtraffic (to their and training their sales reps to capitalizes on that traffic.
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