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

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Henry Helgeson and Scott Zdanis established the company in 1998 as a resellere of credit card processing terminal s overthe Internet. To a smaller extentf the company provided processing of creditcard transactions. But as marginh compression made equipment saledsless profitable, the partners responded by ramping up processingt services. Today, its processing servicesd constitute 90 percent of its tota lgross revenue, while equipment and softwares sales are 10 percent.
Business has been so brisk it signedup 2,300 new customersa in April alone that the company is planning to increase its sales forces by 30 percent or 40 percent within the next 60 “We basically are getting more businessee trying to sign up (for our services) than we have the capacity for, and we’re trying to staff up for that as quickly as says Helgeson, 34, who serve s as president and co-CEO. Co-founder Zdanisd has since moved to Miami and plays a less activde role inthe company.
Merchant Warehouses acts as a third-party processor, facilitatingg payment transactions between merchants and credit card essentially by getting money off ofthe consumer’sa credit card and into the business’s bank account. Its residual-baseed business model makes money by charging for that servicse oneach transaction. Since its the 150-employee company estimatexs serving a cumulative total of morethan 87,000 customerse nationwide — primarily smal l and medium-size businesses; about 56,000 are active accountsw right now, with most of the attritioh due to companies going out of business, Helgesonm notes. Today, Merchant Warehouse is processing morethan 3.
5 million payment transactions per month. Aftetr hitting $27.3 million in revenue in the company is shootingfor $32 milliom to $34 million this Helgeson says Merchant Warehouse has also benefitedr by becoming more of a technology-driven company. “Whenm we started to hire our own software developerse 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 hiree its first software developer.
It subsequently buily its own sophisticated customer relationship managementsystem in-house that has enabled the company to better measure the performance of its accounts and And 18 months ago, it completed the development of the necessary infrastructure to begin processing some transactionz through its own electronic gateway here in Boston. It continuea to utilize three large outside firms to assist in processingh the bulk ofthe transactions. The companh also works with a pool of about100 point-of-sales system resellers, who often refer businesse to Merchant Warehouse.
The company has also used technologt to innovate its services in an industr y where Helgeson says the competitionis fierce. “Our industrg has been pretty much vanilla credit and debit Helgeson says. “We had to look at it and say, ‘Whay can we do here to differentiate ” For instance, it offerzs wireless credit card processing services to iPhone and BlackBerrgy users who have installed its software applicationzs ontheir PDAs.
Those mobile merchants now represent 10 percenty to 15 percent ofthe company’s new It has also partnered with another , to develop a card readerf that encrypts the credit card number as it is being swipef to help prevent security breaches. “They’re a very impressive says Steve Parks, vice president of , an Atlanta-based firm that Merchant Warehouse has engaged for some of its processingh services for many He attributesthe firm’s growth to “somed very shrewd investments in technology and being aheaf of the curve in terms of technology and how to use it to driver traffic (to their business), and trainintg their sales reps to capitalizs on that traffic.
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