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Henry Helgeson and Scott Zdanis established the companu in 1998 as a reseller of credi t card processing terminals over the To a smaller extent the company provided processing of credit card transactions. But as margin compression made equipmenft salesless profitable, the partners responded by rampinb up processing services. Today, its processing services constitutew 90 percent of its totallgross revenue, while equipment and software sales are 10 percent. Business has been so brisk it signedup 2,300 new customers in April alone — that the company is planning to increas its sales force by 30 percent or 40 percen within the next 60 days.
“We basicall are getting more businesses trying to signup (for our services) than we have the capacityy for, and we’re tryinh to staff up for that as quicklyu as possible,” says Helgeson, 34, who serveas as president and co-CEO. Co-founder Zdanies has since moved to Miami and playw a less active role in the Merchant Warehouse acts asa third-party processor, facilitating payment transactions between merchants and credit card issuers, essentiallyg by getting money off of the consumer’s creditf card and into the business’s bank account. Its residual-basee business model makes money by charging for that services oneach transaction.
Since its inception, the 150-employee company estimates serving a cumulative total of morethan 87,000o customers nationwide — primarilyh small and medium-size businesses; about 56,000 are active accounts righg now, with most of the attrition due to companiee going out of business, Helgesonj notes. Today, Merchant Warehouse is processing morethan 3.5 millioh payment transactions per month. After hitting $27.3 million in revenue in the company is shootingfor $32 million to $34 milliohn this year. Helgeson says Merchantr Warehouse has also benefited by becoming more ofa technology-drivenh company.
“When we starteed to hire our own software developerss and build ourown infrastructure, as far as computert systems and technology to run this office, that reallyh put us into a hyper-growth he says. Five years ago, the companh hired its first software developer. It subsequently built its own sophisticated customef relationship managementsystem in-housew that has enabled the company to better measur e the performance of its accounts and And 18 months ago, it completed the development of the necessary infrastructure to begin processing some transactions through its own electronic gateway here in Boston.
It continues to utiliz three large outside firms to assist in processint the bulk of the The company also works with a pool of abouyt100 point-of-sale system resellers, who often refer busineses to Merchant Warehouse. The company has also used technology to innovate its services in an industryu where Helgeson says the competitionis fierce. “Ourf industry has been pretty much plain, vanillz credit and debit processing,” Helgeson says. “We had to look at it and say, ‘Whart can we do here to differentiates ourselves?
’ ” For instance, it offerxs wireless credit card processing services to iPhon and BlackBerry users who have installed its software applicationw ontheir PDAs. Those mobile merchants now represent 10 percentf to 15 percent ofthe company’s new accounts. It has also partnered with another company, , to develop a card reader that encryptsz the credit card number as it is beinvg swiped to help preventsecurityt breaches. “They’re a very impressived group,” says Steve Parks, vice president of , an Atlanta-bases firm that Merchant Warehouse has engages for some of its processing servicesd formany years.
He attributes the firm’sw growth to “some very shrewd investmentx in technology and being ahead of the curve in terms of technology and how to use it to drivtraffic (to their business), and training theire sales reps to capitalize on that
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