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Henry Helgeson and Scotty Zdanis established the company in 1998 as a reselledr of credit card processing terminals overthe Internet. To a smallefr extent the company provided processing of crediftcard transactions. But as margin compression made equipment salesless profitable, the partners responded by ramping up processing Today, its processing services constitute 90 percent of its totall gross revenue, while equipment and software sales are 10 Business has been so brisok — it signed up 2,300 new customersw in April alone — that the companyg is planning to increase its salesw force by 30 percent or 40 percen t within the next 60 days.
“We basically are getting more businesse trying to signup (for our than we have the capacity for, and we’rde trying to staff up for that as quickly as says Helgeson, 34, who serves as president and co-CEO. Co-founder Zdanis has sincwe moved to Miami and plays a less active role in the Merchant Warehouse acts asa third-party facilitating payment transactions between merchantsa and credit card issuers, essentially by getting moneyy off of the consumer’s credit card and into the business’x bank account. Its residual-based business model makee money by charging for that services oneach transaction.
Since its inception, the 150-employee companty estimates serving a cumulative total of morethan 87,000 customers nationwide — primarily small and medium-size about 56,000 are active accounts right now, with most of the attritio due to companies going out of business, Helgesonh notes. Today, Merchant Warehouse is processinhg morethan 3.5 million payment transactionas per month. After hitting $27.3 million in revenue in 2008, the company is shooting for $32 million to $34 million this year. Helgeson says Merchangt Warehouse has also benefited by becoming more ofa technology-drivejn company.
“When we started to hire our own softwarde developers and build our own as far as computer systems and technologyu to run this that really put us intoa hyper-growthj mode,” he says. Five yearss ago, the company hired its firsft software developer. It subsequently built its own sophisticated customer relationshiop managementsystem in-house that has enabledr the company to better measuree the performance of its accountzs and staff. And 18 months ago, it completef the development of the necessary infrastructure to beginn processing some transactions through its own electronic gateway herein Boston.
It continues to utilize thre e large outside firms to assist in processinb the bulk of the The company also works with a pool of aboutr100 point-of-sale system resellers, who often refere business to Merchant Warehouse. The company has also used technologty to innovate its servicesw in an industry where Helgeson says the competitionis “Our industry has been pretty much plain, vanillaz credit and debit processing,” Helgeson “We had to look at it and say, ‘What can we do here to differentiatd ourselves?
’ ” For instance, it offers wireless credi t card processing services to iPhone and BlackBerry user who have installed its software applicationzs on their PDAs. Those mobilre merchants now represent 10 percentg to 15 percent ofthe company’xs new accounts. It has also partnered with anothet company, , to develoop a card reader that encrypte the credit card number as it is being swiped to help prevenfsecurity breaches. “They’re a very impressive says Steve Parks, vice president of , an Atlanta-baseds firm that Merchant Warehouse has engaged for some of its processinfg services formany years.
He attributea the firm’s growth to “some very shrewd investments in technology and beiny ahead of the curve in terms of technology and how to use it to drivetraffic (to their business), and training theid sales reps to capitalize on that
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