Credit card processing company grows business by evolving strategy - The Business Review (Albany):

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Henry Helgeson and Scott Zdanis established the company in 1998 as a reselletr of credit card processing terminals overthe Internet. To a smalletr extent the company provided processing of creditcard transactions. But as margin compression made equipment salesless profitable, the partners responded by rampinfg up processing services. Today, its processing services constitutr 90 percent of its totalgrossd revenue, while equipment and software sales are 10 Business has been so brismk — it signed up 2,300 new customers in April alone — that the companu is planning to increase its salee force by 30 percent or 40 percent withinj the next 60 days.
“We basically are getting more businessezs trying to signup (for our than we have the capacity for, and we’rd trying to staff up for that as quickly as possible,” says Helgeson, 34, who serves as presidentr and co-CEO. Co-founder Zdanis has sinces moved to Miami and plays a less activs role inthe company. Merchant Warehouswe acts as a third-party facilitating payment transactions between merchants and credit card essentially by getting mone y off ofthe consumer’s credit card and into the business’sx bank account. Its residual-based business model makes money by charging for that servicre oneach transaction.
Since its inception, the 150-employee company estimates serving a cumulative total of morethan 87,009 customers nationwide — primarily small and medium-sizde businesses; about 56,000 are active accounts right now, with most of the attrition due to companies going out of business, Helgesonb notes. Today, Merchant Warehouse is processing morethan 3.5 million payment transactions per month. After hitting $27.3 millioh in revenue in 2008, the company is shootintg for $32 million to $34 million this Helgeson says Merchant Warehouse has also benefiteds by becoming more ofa technology-drivemn company.
“When we started to hire our own softwarw developers and build ourown infrastructure, as far as computer systemsa and technology to run this that really put us into a hyper-growthh mode,” he says. Five years ago, the company hired its first software developer. It subsequently built its own sophisticateds customer relationship managementsystemn in-house that has enabled the company to better measure the performance of its accounts and staff.
And 18 months ago, it complete d the development of the necessary infrastructure to begin processinh some transactions through its own electronif gateway here in It continues to utilize three large outsidw firms to assist in processing the bulk of the The company also works with a pool of about100 point-of-sal system resellers, who often refer business to Merchant Warehouse. The company has also used technologty to innovate its services in an industry where Helgesoh says the competitionis fierce. “Our industrhy has been pretty much plain, vanilla credit and debit processing,” Helgeson says.
“We had to look at it and say, ‘Whatg can we do here to differentiatr ourselves?’ ” For it offers wireless credit card processing services to iPhone and BlackBerry users who have installed its software applications ontheidr PDAs. Those mobile merchants now represent 10 percent to 15 percenty ofthe company’s new It has also partnered with another company, , to develop a card reader that encryptas the credit card number as it is beinf swiped to help prevent security breaches.
“They’rwe a very impressive group,” says Steve Parks, vice presidentf of , an Atlanta-basedr firm that Merchant Warehouse has engaged for some of its processinvg services for many He attributesthe firm’s growth to “somr very shrewd investments in technology and being ahead of the curve in terms of technology and how to use it to drivr traffic (to their business), and training their sales reps to capitalizde on that traffic.
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