Credit card processing company grows business by evolving strategy - St. Louis Business Journal:

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Henry Helgeson and Scott Zdanids established the company in 1998 as a reselledr of credit card processing terminals overthe Internet. To a smaller extengt the company provided processing of creditgcard transactions. But as margin compression made equipment sales less the partners responded by ramping upprocessin services. Today, its processing servicees constitute 90 percent of its totalgross revenue, while equipment and software sales are 10 Business has been so brisk — it signed up 2,300 new customers in April alone — that the company is planning to increase its sales forcse by 30 percent or 40 percentt within the next 60 “We basically are getting more businesses tryin g to sign up (for our services) than we have the capacituy for, and we’re trying to staff up for that as quicklgy as possible,” 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-partu processor, facilitating payment transactions betweenm merchants and credit card issuers, essentially by getting money off of the consumer’s credit card and into the business’s bank Its residual-based business model makes monegy by charging for that service on each transaction.
Sincre its inception, the 150-employee company estimatez serving a cumulative total of morethan 87,000 customers nationwide — primarilyh small and medium-size businesses; about 56,000o are active accounts right now, with most of the attritioj due to companies going out of business, Helgeson notes. Merchant Warehouse is processing morethan 3.5 milliojn payment transactions per month. After hitting $27.w3 million in revenue in the company is shootingfor $32 million to $34 millio this year. Helgeson says Merchant Warehouse has also benefited by becominvg more ofa technology-driven company.
“When we started to hire our own softwar e developers and build ourown infrastructure, as far as computef systems and technology to run this office, that really put us into a hyper-growtg mode,” he says. Five years ago, the company hirer its first software developer. It subsequentlgy built its own sophisticated customer relationship managementsystem in-house that has enabled the company to better measured the performance of its accounts and staff. And 18 monthzs ago, it completed the development of the necessaryt infrastructure to begin processing some transactions througb its own electronic gateway herein Boston.
It continues to utilizer three large outside firms to assist in processingb the bulk ofthe transactions. The company also worke with a pool of about100 point-of-sale system resellers, who oftenj refer business to Merchant Warehouse. The company has also used technology to innovatre its services in an industry where Helgesonm says the competitionis “Our industry has been pretty much vanilla credit and debit processing,” Helgesojn says. “We had to look at it and say, ‘What can we do here to differentiatw ourselves?
’ ” For it offers wireless credit card processingt services to iPhone and BlackBerryu users who have installed its softwar e applications ontheir PDAs. Those mobile merchants now represent 10 percent to 15 percenrt ofthe company’s new accounts. It has also partnerexd with another company, , to develop a card reade r that encrypts the credit card number as it is beingb swiped to help preventsecurity breaches. “They’re a very impressivre group,” says Steve Parks, vice president of , an Atlanta-basexd firm that Merchant Warehouse has engaged for some of its processinhg services formany years.
He attributes the firm’s growtb to “some very shrewf investments in technology and being ahead of the curvwe in terms of technology and how to use it to drivetraffic (to their business), and training theird sales reps to capitalizse on that traffic.”