Credit card processing company grows business by evolving strategy – Business First of Louisville:

Henry Helgeson and Scott Zdaniz established the company in 1998 as a reseller of crediyt card processing terminals overthe Internet. To a smalle r extent the company providedd processing of creditcard transactions. But as margin compression made equipment salesless profitable, the partnerzs responded by ramping up processiny services. Today, its processing services constitute 90 percenyt of its totalgross revenue, whilee equipment and software sales are 10 Business has been so brisk it signed up 2,30 new customers in April alone that the company is planning to increase its salex force by 30 percent or 40 percenty within the next 60 days.
“We basically are gettinhg more businesses trying to signup (for our services) than we have the capacit y for, and we’re trying to staff up for that as quickly as says Helgeson, 34, who serves as president and co-CEO. Co-foundedr Zdanis has since moved to Miami and plays a less active role inthe company. Merchant Warehouse acts as a third-partyu processor, facilitating payment transactions betweeh merchants and credit card essentially by getting money off ofthe consumer’sd credit card and into the business’s bank account.
Its residual-based businesd model makes money by charginyg for that service on each Sinceits inception, the 150-employee company estimatezs serving a cumulative total of more than 87,000p customers nationwide — primarily small and medium-sizd businesses; about 56,000 are activw accounts right now, with most of the attritiob due to companies going out of Helgeson notes. Today, Merchant Warehouses is processing morethan 3.5 million paymentr transactions per month. After hitting $27.3 million in revenue in 2008, the companyt is shooting for $32 milliohn to $34 million this year.
Helgeson says Merchant Warehousee has also benefited by becoming more ofa technology-driven “When we started to hire our own software developerw and build our own infrastructure, as far as computer systemsz and technology to run this office, that reallyy put us into a hyper-growth he says. Five years ago, the company hired its firsty software developer. It subsequently built its own sophisticated customer relationshi p managementsystem in-house that has enabled the compant to better measure the performance of its accounts and And 18 months ago, it completed the developmen t of the necessary infrastructure to begin processing some transactiond through its own electronic gateway here in It continues to utilize threw large outside firms to assist in processing the bulk of the The company also works with a pool of about 100 point-of-sale syste m resellers, who often refer business to Merchantg Warehouse.
The company has also used technology to innovater its services in an industry where Helgeson says the competitiohis fierce. “Our industry has been pretty much plain, vanillqa credit and debit processing,” Helgeson says. “We had to look at it and say, ‘Whayt can we do here to differentiate ” For instance, it offers wireless creditt card processing services to iPhone and BlackBerry users who have installedc its software applications on their Those mobile merchants now represenrt 10 percent to 15 percent ofthe company’s new It has also partnered with anotherf company, , to develop a card readef that encrypts the credit card number as it is being swipefd to help prevent security breaches.
“They’rw a very impressive group,” says Steved Parks, vice president of , an Atlanta-based firm that Merchant Warehouse has engaged for some of its processing services formany years. He attribute the firm’s growth to “some very shrewd investmentxs in technology and being ahead of the curvse in terms of technology and how to use it to driv etraffic (to their business), and training their sales reps to capitalize on that
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