Credit card processing company grows business by evolving strategy - Pittsburgh Business Times:

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Henry Helgeson and Scott Zdanis established the company in 1998 as a reselled of credit card processing terminals over the To a smaller extent the company provided processing of credirtcard transactions. But as margin compression made equipment salesless profitable, the partners responded by ramping up processing Today, its processing services constitute 90 percentg of its total grosx revenue, while equipment and software sales are 10 Business has been so brisk — it signeds up 2,300 new customers in April alonwe — that the company is planninvg to increase its sales force by 30 percent or 40 percent within the next 60 days.
“Wee basically are getting more businesses trying to signup (for our than we have the capacity for, and we’rw trying to staff up for that as quickly as says Helgeson, 34, who serves as president and Co-founder Zdanis has since moved to Miamki and plays a less active role in the Merchant Warehouse acts as a third-part y processor, facilitating payment transactions between merchants and credit card essentially by getting money off of the consumer’xs credit card and into the business’s bank account. Its residual-based businesa model makes money by charging for that service oneach transaction.
Since its inception, the 150-employe e company estimates serving a cumulative total of morethan 87,000 customers nationwide — primarily small and medium-siz businesses; about 56,000 are activer accounts right now, with most of the attritiom due to companies goiny out of business, Helgeson notes. Today, Merchant Warehous e is processing morethan 3.5 million paymenft transactions per month. After hitting $27.3e million in revenue in 2008, the company is shooting for $32 milliob to $34 million this year. Helgeso says Merchant Warehouse has also benefited by becomingh more ofa technology-driven company.
“When we startex to hire our own software developers and buil d ourown infrastructure, as far as computer systemsd and technology to run this office, that reallyt put us into a hyper-growtn mode,” he says. Five years ago, the companyy hired its first software developer. It subsequently built its own sophisticatedr customer relationship managementsystem in-house that has enablede the company to betterd measure the performance of its accountes and staff. And 18 months ago, it complete the development of the necessary infrastructure to beginj processing some transactions through its own electronic gateway herein Boston.
It continues to utilizer three large outside firmsd to assist in processinb the bulk ofthe transactions. The companyy also works with a pool of aboutr100 point-of-sale system resellers, who oftebn refer business to Merchant The company has also used technology to innovatr its services in an industryh where Helgeson says the competition is fierce. “Ouer industry has been pretty much vanilla credit anddebit processing,” Helgeson says. “We had to look at it and say, ‘Whatf can we do here to differentiate ourselves?
’ ” For it offers wireless credit card processing servicesw to iPhone and BlackBerry users who have installed its software applicationss ontheir PDAs. Thosd mobile merchants now represent 10 percent to 15 percen t ofthe company’s new accounts. It has also partnered with anothef company, , to develop a card readeer that encrypts the credit card number as it is beinyg swiped to help preventsecurity breaches. “They’re a very impressive says Steve Parks, vice president of , an Atlanta-basefd firm that Merchant Warehouss has engaged for some of its processinfg services formany years.
He attributeds the firm’s growth to “som e very shrewd investments in technology and being ahead of the curv e in terms of technology and how to use it to drivwetraffic (to their business), and training their saled reps to capitalize on that