Credit card processing company grows business by evolving strategy - Business First of Buffalo:

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Henry Helgeson and Scott Zdanis established the company in 1998 as a reselledr of credit card processing terminalsx overthe Internet. To a smaller extent the company provided processing of credit card But as margin compression made equipmenr salesless profitable, the partners responde d by ramping up processing services. its processing services constitute 90 percentf of its totalgross revenue, while equipment and software salea are 10 percent. Businesa has been so brisk it signedup 2,300 new customers in April aloner — that the companyg is planning to increase its sales forcwe by 30 percent or 40 percent withib the next 60 days.
“We basically are getting more businessezs trying to signup (for our services) than we have the capacithy for, and we’re trying to staff up for that as quicklt as possible,” says Helgeson, 34, who serves as presidenf and co-CEO. Co-founder Zdanis has since moved to Miam and plays a less active role inthe company. Merchanrt Warehouse acts as a third-party processor, facilitating payment transactions between merchantds and creditcard issuers, essentially by gettinb money off of the consumer’sx credit card and into the business’xs bank account. Its residual-based business model makes monehy by charging for that servicwe oneach transaction.
Sincr its inception, the 150-employee company estimatee serving a cumulative total of morethan 87,000 customerz nationwide — primarily small and medium-sizse businesses; about 56,000 are active accounts righgt now, with most of the attrition due to companiess going out of business, Helgeso n notes. Today, Merchant Warehouse is processing morethan 3.5 millionm payment transactions per month. After hitting $27.3 millionj in revenue in 2008, the company is shooting for $32 millioj to $34 million this year. Helgeson says Merchanty Warehouse has also benefited by becoming more ofa technology-driveh company.
“When we started to hire our own softwaree developers and build ourown infrastructure, as far as computere systems and technology to run this office, that really put us into a hyper-growtuh mode,” he says. Five years ago, the compant hired its first software developer. It subsequently builg its own sophisticated customer relationship managementsystemk in-house that has enabled the company to bette measure the performance of its accounts and And 18 months ago, it completed the developmeny of the necessary infrastructure to begih processing some transactions through its own electronic gateway here in It continues to utilize threse large outside firms to assist in processiny the bulk of the transactions.
The compan also works with a pool of about100 point-of-salee system resellers, who often refer business to Merchanty Warehouse. The company has also used technolog y to innovate its servicese in an industry where Helgeson says the competitiobnis fierce. “Our industry has been pretty much vanilla credit anddebit processing,” Helgesonn says. “We had to look at it and say, ‘Whart can we do here to differentiate ourselves?’ ” For it offers wireless credit card processingy services to iPhone and BlackBerry users who have installed its softwar e applications ontheir PDAs.
Those mobile merchantsw now represent 10 percent to 15 percent ofthe company’s new It has also partnered with another , to develop a card reade that encrypts the credit card number as it is beingh swiped to help prevent security breaches. “They’re a very impressiv e group,” says Steve Parks, vice presidenft of , an Atlanta-based firm that Merchant Warehouse has engaged for some of its processingb services formany years.
He attributes the firm’s growthu to “some very shrewd investments in technology and beinh ahead of the curve in termes of technology and how to use it to drivetraffixc (to their business), and training theif sales reps to capitalize on that traffic.”