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

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Henry Helgeson and Scott Zdanis established the company in 1998 as a reselle r of credit card processing terminalz overthe Internet. To a smaller extent the company provided processin g of creditcard transactions. But as margin compressioj made equipment salesless profitable, the partnerss responded by ramping up processing Today, its processing services constitute 90 percentf of its total gross while equipment and software sales are 10 Business has been so brisok — it signed up 2,300 new customerse in April alone — that the company is planninv to increase its sales force by 30 perceng or 40 percent within the next 60 days.
“We basicall y are getting more businessezs trying to signup (for our services) than we have the capacitgy for, and we’re trying to staff up for that as quicklt as possible,” says Helgeson, 34, who serves as presidentf and co-CEO. Co-founder Zdanis has since moveed to Miami and playse a less active role inthe company. Merchant Warehoused acts as a third-party processor, facilitating paymenyt transactions between merchants and credittcard issuers, essentially by getting moneu off of the consumer’s credit card and into the business’ s bank account. Its residual-based businesse model makes money by charging for that service oneach transaction.
Since its the 150-employee company estimates serving a cumulativee total of morethan 87,000 customers nationwides — primarily small and medium-size businesses; about 56,009 are active accounts right now, with most of the attritionn due to companies going out of business, Helgesonb notes. Today, Merchant Warehouse is processing morethan 3.5 millioh payment transactions per month. After hittin g $27.
3 million in revenue in 2008, the company is shooting for $32 million to $34 million this Helgeson says Merchant Warehouses has also benefited by becoming more ofa technology-driven “When we started to hire our own software developers and builed our own infrastructure, as far as compute r systems and technology to run this office, that reallty put us into a hyper-growth he says. Five years ago, the compangy hired its first softwarr developer. It subsequently built its own sophisticated customefr relationship managementsystem in-houser that has enabled the company to better measurs the performance of its accountx and staff.
And 18 months ago, it completed the developmentf of the necessary infrastructure to begin processing some transactionss through its own electronic gateway here in It continues to utilize three largde outside firms to assist in processing the bulk of the The company also works with a pool of abour100 point-of-sale system resellers, who often refer business to Merchant Warehouse. The companty has also used technology to innovate its servicess in an industry where Helgesoh says the competitionis fierce. “Our industrh has been pretty much plain, vanilla creditf and debit processing,” Helgeson says.
“We had to look at it and say, ‘Whar can we do here to differentiatee ourselves?’ ” For it offers wireless credit card processing services to iPhons and BlackBerry users who have installed its softwarw applications ontheir PDAs. Those mobile merchantxs now represent 10 percenyt to 15 percent ofthe company’s new accounts. It has also partneredx with another company, , to developp a card reader that encrypts the credit card numberf as it is being swipedr to help preventsecurity breaches.
“They’re a very impressive group,” says Steve Parks, vice presidentr of , an Atlanta-basefd firm that Merchant Warehouse has engager for some of its processinhg services formany years. He attributes the firm’ s growth to “some very shrewd investments in technologhy and being ahead of the curvde in terms of technology and how to use it to drivsetraffic (to their business), and training their sales reps to capitaliz on that traffic.
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