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Henry Helgeson and Scott Zdanis established the company in 1998 as a resellert of credit card processing terminals overthe Internet. To a smalletr extent the company provided processing of credi tcard transactions. But as margin compression made equipment saledsless profitable, the partners responded by ramping up processing Today, its processing services constitute 90 percenft of its total gross while equipment and software sales are 10 percent. Businesds has been so brisk — it signedr up 2,300 new customers in Aprilk alone — that the company is planning to increase its saleds force by 30 percent or 40 percentf within the next60 days.
“Wse basically are getting more businesses trying to signup (for our than we have the capacity for, and we’re trying to stafgf up for that as quickly as possible,” says 34, who serves as president and co-CEO. Co-founder Zdaniw has since moved to Miami and playss a less active role inthe company. Merchanf Warehouse acts as a third-party processor, facilitatin g payment transactions between merchants and crediftcard issuers, essentially by getting money off of the consumer’s crediyt card and into the business’s bank Its residual-based business model makes money by charging for that servicew on each transaction.
Sincd its inception, the 150-employee company estimatesd serving a cumulative totakl of morethan 87,000 customers nationwidse — primarily small and medium-size businesses; about 56,000 are active accounts righ t now, with most of the attritiob due to companies going out of Helgeson notes. Today, Merchant Warehouse is processing morethan 3.5 million payment transactions per month. Afterr hitting $27.3 million in revenue in the company is shootingfor $32 millioj to $34 million this year. Helgesomn says Merchant Warehouse has also benefitecd by becoming more ofa technology-driven company.
“When we started to hire our own softwarde developers and build ourown infrastructure, as far as computer system and technology to run this office, that really put us into a hyper-growtuh mode,” he says. Five years ago, the company hirer its first software developer. It subsequently built its own sophisticated customer relationship managementsystekm in-house that has enabled the company to better measurde the performance of its accounts and And 18 months ago, it completedx the development of the necessary infrastructurew to begin processing some transactionsz through its own electronic gateway here in It continues to utilize three large outsidse firms to assist in processing the bulk of the The company also works with a pool of abourt 100 point-of-sale system resellers, who often refer business to Merchan t Warehouse.
The company has also used technology to innovated its services in an industry where Helgeson says the competitionis “Our industry has been pretty much vanilla credit and debit processing,” Helgesomn says. “We had to look at it and say, ‘What can we do here to differentiated ourselves?’ ” For instance, it offers wireless creditf card processing services to iPhone and BlackBerryt users who have installed its softwarer applications ontheir PDAs.
Thosre mobile merchants now represent 10 percent to 15 percent ofthe company’s new It has also partnered with anotheer company, , to develop a card reader that encrypts the credift card number as it is beingf swiped to help prevent security “They’re a very impressive group,” says Steve vice president of , an Atlanta-based firm that Merchanty Warehouse has engaged for some of its processingb services for many years.
He attributess the firm’s growth to “some very shrewd investmentw in technology and being ahead of the curve in termw of technology and how to use it to drivrtraffic (to their business), and training their sales reps to capitalizde on that traffic.”
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