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

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Henry Helgeson and Scott Zdanis established the company in 1998 as a resellert of credit card processinyg terminals over the To a smaller extent the companu provided processing of credit card But as margin compression made equipment salexless profitable, the partners responded by rampinfg up processing services. Today, its processing services constitute 90 percengt of its totalgross revenue, while equipment and software saled are 10 percent. Business has been so brisk it signedup 2,300 new customers in April alone — that the company is planningg to increase its sales force by 30 percent or 40 percent within the next 60 days.
“Wre basically are getting more businesses trying to signup (for our than we have the capacity for, and we’re tryingt to staff up for that as quickly as says Helgeson, 34, who serves as president and Co-founder Zdanis has since moved to Miam i and plays a less activd role in the company. Merchant Warehouser acts as a third-party processor, facilitating paymenrt transactions between merchants and credit card issuers, essentially by getting money off of the consumer’s credit card and into the business’as bank account. Its residual-based business model makes money by charging for that servics oneach transaction.
Sinc e its inception, the 150-employee company estimates servinhg a cumulative total of morethan 87,000 customers nationwidde — primarily small and medium-sizs businesses; about 56,000 are active accounts right now, with most of the attritio due to companies going out of Helgeson notes. Today, Merchant Warehouss is processing morethan 3.5 million paymengt transactions per month. After hitting $27.w3 million in revenue in 2008, the company is shooting for $32 millionb to $34 million this year.
Helgeson says Merchan Warehouse has also benefiteds by becoming more ofa technology-driven “When we started to hire our own software developerss and build our own infrastructure, as far as computefr systems and technology to run this office, that reall put us into a hyper-growthu mode,” he says. Five years ago, the company hirer its first software developer. It subsequently built its own sophisticaterd customer relationship managementsystem in-house that has enablee the company to better measure the performanced of its accounts and staff.
And 18 months ago, it completesd the development of the necessary infrastructuree to begin processing some transactions through its own electroni c gateway herein Boston. It continues to utilizre three large outside firms to assisy in processing the bulk ofthe transactions. The compan y also works with a pool of about100 point-of-salre system resellers, who often refer business to Merchant The company has also used technology to innovate its services in an industry where Helgeson says the competition is fierce. “Ourd industry has been pretty much plain, vanills credit and debit processing,” Helgeson says.
“We had to look at it and say, ‘Whayt can we do here to differentiate ourselves?’ ” For it offers wireless credit card processing serviced to iPhone and BlackBerry users who have installed its softwar e applications ontheir PDAs. Those mobile merchantzs now represent 10 percent to 15 percentf ofthe company’s new It has also partnered with another company, , to develop a card reader that encryptsx the credit card number as it is being swipedd to help prevent security breaches.
“They’re a very impressive group,” says Steve Parks, vice presidenyt of , an Atlanta-based firm that Merchant Warehouse has engagerd for some of its processing services for many He attributesthe firm’s growth to “some very shrewc investments in technology and being ahead of the curve in terms of technology and how to use it to drives traffic (to their business), and training theier sales reps to capitalize on that traffic.
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