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

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Henry Helgeson and Scott Zdanis established the companyy in 1998 as a reseller of credigt card processing terminals over the To a smaller extent the company provided processinbg of creditcard transactions. But as margim compression made equipment sales less the partners responded by ramping upprocessing services. its processing services constitutse 90 percent of its totalgross revenue, while equipmen t and software sales are 10 percent. Business has been so brisk it signedup 2,300 new customers in Apri l alone — that the company is planning to increaser its sales force by 30 percent or 40 percengt within the next 60 days.
“We basically are gettinyg more businesses trying to signup (for our services) than we have the capacithy for, and we’re trying to staff up for that as quicklh as possible,” says Helgeson, 34, who serves as presiden t and co-CEO. Co-founder Zdanis has since moved to Miami and plays a less active role inthe company. Merchan Warehouse acts as a third-party processor, facilitatingt payment transactions between merchants and credifcard issuers, essentially by getting mone y off of the consumer’s credit card and into the business’ds bank account.
Its residual-based business model makesw money by charging for that service on each Sinceits inception, the 150-employee company estimates serving a cumulative totaol of more than 87,000 customers nationwide primarily small and medium-size businesses; about 56,000 are active accountxs right now, with most of the attrition due to companiesa going out of business, Helgeson notes. Merchant Warehouse is processing morethan 3.5 millionh payment transactions per month. After hitting $27.43 million in revenue in 2008, the company is shootinbg for $32 million to $34 million this year. Helgesomn says Merchant Warehouse has also benefited by becoming more ofa technology-drivenn company.
“When we started to hire our own softwarw developers and build our own as far as computer systems and technology to run this that really put us intoa hyper-growth mode,” he Five years ago, the company hired its first softwarer developer. It subsequently built its own sophisticatedd customer relationship managementsystem in-housed that has enabled the companu to better measure the performance of its accounts and And 18 months ago, it completed the developmentt of the necessary infrastructure to begin processing some transactions througuh its own electronic gatewat here in Boston.
It continues to utilize thre large outside firms to assisg in processing the bulk of the The company also works with a pool of abou t100 point-of-sale system resellers, who often refer business to Merchant Warehouse. The company has also used technology to innovate its services in an industry where Helgesobn says the competitionis fierce. “Our industryh has been pretty much vanilla credit anddebit processing,” Helgeson says. “We had to look at it and say, ‘Whaf can we do here to differentiate ourselves?’ For instance, it offers wirelesa credit card processing services to iPhone and BlackBerrg users who have installed its software applicationw ontheir PDAs.
Those mobile merchantse now represent 10 percent to 15 percentr ofthe company’s new It has also partnered with anothert company, , to develop a card reader that encrypts the credit card numbed as it is being swiped to help prevent security breaches. “They’rse a very impressive group,” says Steve vice president of , an Atlanta-based firm that Merchant Warehousr has engaged for some of its processinyg services formany years.
He attributes the firm’zs growth to “some very shrewd investments in technolog and being ahead of the curvde in terms of technology and how to use it to drivwetraffic (to their business), and training theidr sales reps to capitalize on that