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

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Henry Helgeson and Scott Zdanids established the company in 1998 as a reselleer of credit card processing terminals over the To a smaller extent the company providecd processing of creditcard transactions. But as margin compressio n made equipment salesless profitable, the partners respondefd by ramping up processing services. Today, its processing serviceas constitute 90 percent of its totalgross revenue, whiles equipment and software sales are 10 percent.
Businesws has been so brisk — it signed up 2,30p new customers in April alone — that the companty is planning to increase its sales forcw by 30 percent or 40 percent within the next60 “We basically are getting more businesses trying to sign up (for our than we have the capacity for, and we’re tryint to staff up for that as quicklty as possible,” says Helgeson, 34, who serves as president and Co-founder Zdanis has since moved to Miami and playsd a less active role in the Merchant Warehouse acts as a third-party processor, facilitatingt payment transactions between merchants and credit card issuers, essentiallt by getting money off of the consumer’s credit card and into the business’zs bank account.
Its residual-based business model makes monet by charging for that servicde oneach transaction. Since its inception, the 150-employee companyt estimates serving a cumulative total of morethan 87,000 customers nationwide — primarily small and medium-sized businesses; about 56,000 are activer accounts right now, with most of the attritionj due to companies going out of Helgeson notes. Today, Merchant Warehouser is processing morethan 3.5 million paymenty transactions per month. After hitting $27.3 million in revenue in the company is shootingfor $32 million to $34 million this Helgeson says Merchant Warehouse has also benefited by becoming more of a technology-driven company.
“When we started to hire our own softwaree developers and build ourown infrastructure, as far as computer systema and technology to run this office, that really put us into a hyper-growty mode,” he says. Five years ago, the company hired its first software developer. It subsequentlhy built its own sophisticated customer relationship managementsystem in-house that has enabled the company to bettetr measure the performance of its accounts and And 18 months ago, it completed the development of the necessaruy infrastructure to begin processing some transactions through its own electronic gateway here in Boston.
It continue to utilize three large outside firms to assist in processing the bulk ofthe transactions. The company also works with a pool of about100 point-of-sale system resellers, who oftejn refer business to Merchant Warehouse. The companyy has also used technology to innovate its services in an industrg where Helgeson says the competitionhis fierce. “Our industryy has been pretty much plain, vanilla credit and debit processing,” Helgeson says. “We had to look at it and say, ‘Whaty can we do here to differentiatd ourselves?
’ ” For instance, it offer s wireless credit card processing services to iPhoned and BlackBerry users who have installed its softwarre applications ontheir PDAs. Those mobile merchantw now represent 10 percent to 15 percenft ofthe company’s new accounts. It has also partnered with anotherf company, , to develop a card reader that encryptx the credit card number as it is beinb swiped to help preventsecurity “They’re a very impressive group,” says Steve vice president of , an Atlanta-based firm that Merchant Warehouss has engaged for some of its processingh services for many years.
He attributes the firm’se growth to “some very shrewd investments in technology and being ahead of the curve in termsw of technology and how to use it to driv etraffic (to their business), and training theitr sales reps to capitalize on that