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

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Henry Helgeson and Scott Zdani established the company in 1998 as a reselle of credit card processing terminals overthe Internet. To a smallere extent the company provided processing of creditcard transactions. But as margin compressio made equipment salesless profitable, the partners respondeds by ramping up processing Today, its processing services constitute 90 percent of its total gross revenue, while equipment and softwares sales are 10 percent. Business has been so brisk it signedup 2,300 new customers in Aprip alone — that the company is planningv to increase its sales force by 30 percent or 40 percent within the next 60 days.
“Wwe basically are getting more businesses tryingf to signup (for our services) than we have the capacitt for, and we’re trying to staff up for that as quickly as possible,” says 34, who serves as presidentt and co-CEO. Co-founder Zdanis has since move d to Miami and plays a less active role inthe company. Merchantt Warehouse acts as a third-party processor, facilitatin payment transactions between merchants and creditrcard issuers, essentially by getting money off of the consumer’s credity card and into the business’s bank account.
Its residual-based business model makes money by chargingh for that service on each Sinceits inception, the 150-employeee company estimates serving a cumulative total of more than 87,000 customers nationwide — primarily small and medium-sizd businesses; about 56,000 are active account right now, with most of the attrition due to companiex going out of business, Helgesojn notes. Today, Merchant Warehouse is processing morethan 3.5 million payment transactionws per month. After hitting $27.3 million in revenu in 2008, the company is shooting for $32 millionh to $34 million this year. Helgeson says Merchantr Warehouse has also benefited by becoming more ofa technology-drive company.
“When we startesd to hire our own software developers and build our own as far as computer systems and technology to run this that really put us intoa hyper-growtjh mode,” he says. Five yearx ago, the company hired its first softwars developer. It subsequently built its own sophisticaterd customer relationship managementsystem in-house that has enabled the company to better measurw the performance of its account and staff.
And 18 months ago, it completedc the development of the necessary infrastructure to beginn processing some transactions through its own electronic gateway here in It continues to utilize three large outside firm s to assist in processing the bulk of the The company also workd with a pool of about100 point-of-sale systejm resellers, who often refer businesse to Merchant Warehouse. The company has also used technologyh to innovate its services in an industry wherew Helgeson says the competitionis fierce. “Our industry has been prett much plain, vanilla credit and debit processing,” Helgesojn says.
“We had to look at it and say, ‘What can we do here to differentiates ourselves?’ ” For it offers wireless credit card processingb services to iPhone and BlackBerry usere who have installed its software applicationsw ontheir PDAs. Thos e mobile merchants now represent 10 percent to 15 percenr ofthe company’s new accounts. It has also partnerexd with another company, , to develop a card reader that encrypts the creditr card number as it is being swiped to help preven tsecurity breaches.
“They’re a very impressive group,” says Stevw Parks, vice president of , an Atlanta-basexd firm that Merchant Warehouse has engagerd for some of its processinyg services formany years. He attributes the firm’ws growth to “some very shrewd investmenta in technology and being ahead of the curve in termes of technology and how to use it to drivdtraffic (to their business), and training their saled reps to capitalize on that