PE Systems LLC, a Spokane company that helps merchants reduce the credit-card fees they pay, says its planning to move soon to accommodate a sharp growth in its work force. The young company says it also expects it will nearly double its revenues this year.


PE Systems, which started here in 2001, has been riding a wave of growth created by consumers escalating credit-card use, a cooling national economy that gives merchants an incentive to cut credit-card transaction costs, and other recent changes in the credit-card industry, says David Osenga, its recently hired chief financial officer.


Its good timing to do what we do, Osenga says. Whats exciting about our business is were in the midst of all this change and in a position to help merchants manage their costs.


PE Systems now has more than 1,000 clients, including the Seattle Times, Seattle Seahawks football team, Goodwill Industries, the American Dental Association, and Duke University, he says.


The companys work force has grown by 20 percent in the past six months to 59 employees, he says. PE Systems could hire three more people immediately, but doesnt have enough room in its 8,600-square-foot office space at 123 S. Wall, just above Europa Pizzaria & Bakery, to add employees, he says. The company is looking to move to a new office in the next two months or so that would have between 12,000 and 15,000 square feet of floor space. Osenga declines for now to disclose further details about the move.


PE Systems has budgeted for 65 employees this year, so it likely will hire more people after the move, he says. About 40 percent of its workers are telephone salespeople trained to bring in new customers, he says. The balance of the work force is support staff for the sales team, account managers, and administrative staff.


While the company expects to continue hiring more employees, its focusing more on developing technology that will allow it to meet demand without having to add significantly to its work force, Osenga says.


The growth were expecting in the future will be more in terms of the revenue base rather than employees, he says.


Osenga declines to disclose the companys annual revenue, but says its sales shot up 45 percent in 2007. PE Systems projects that its revenues will skyrocket 85 percent this year.


Were looking at meeting or exceeding our revenue goals for 2008 and 2009, he says. With the economy the way it is, those projections are very realistic.


The driver of the companys growth is the explosion in consumer use of credit cards, particularly online, he says. Merchants must pay small fees to vendors that process and underwrite credit-card transactions each time a customer makes a credit-card purchase. The fees are distributed among the financial institution that issued the card, the company that process the transaction, and one of the big underwriters of the loan to the cardholder, such as Visa or MasterCard.


PE Systems helps merchants manage their credit-card costs by analyzing their transactions with its patented software, which determines what changes must be made in the clients credit-card fee schedule to save the most money for the client. PE Systems developed the software with a Seattle software company.


Were a sales organization, but were also dependent on developing technology, Osenga says. Our technology has a lot of capabilities, so were looking at how we can use it not only internally to improve our work flows, but also to provide better service to our clients.


The companys services also include providing to clients updated information about changes in the credit-card industry so they can be sure to get the lowest fee structure possible, Osenga says.


Unlike other companies that provide similar services, PE Systems works independently from banks, he says. As a result, he asserts, it can recommend that a merchant switch banks if such a move makes financial sense.


As the national economy softens, merchants are looking at ways to cut costs, such as trimming their costs in making credit-card sales, Osenga says. He says the company has signed a number of contracts recently with such merchants.


Meanwhile, PE Systems growth also likely will be boosted by recent changes in the credit-card industry, he says. For instance, American Express and Discover Financial Services recently changed their business models and pricing structures, and PE Systems will be able to take advantage of some of those changes to produce added savings for its clients, he says. Additionally, Visa went public this year, and MasterCard went public in 2006. As publicly traded companies, those credit-card giants now are motivated to make money for their shareholders. Merchants could see their costs rise as a result, and would turn to companies such as PE Systems to help manage those costs, he says.


Thats partly speculation, but based on the changes were seeing in the market, we expect well have additional opportunities for growth, Osenga says.


In 2006, PE Systems founders, Tom Parrish and Alan McElroy, sold a 40 percent stake in the company to Capital Solutions LLC, a Blue Bell, Pa.-based private-equity firm. Also, Jaguar Capital Partners LLC, of Conshohocken, Pa., a management group that discovered PE Systems for Capital Solutions, earned a finders fee that along with its own investment gave it a 30 percent share of PE Systems. Parrish and McElroy retained the other 30 percent ownership in the company.


When the sale happened, Tom and Alan realized that to take the company to the next level it needed to have outside expertise, Osenga says. Now, we have a solid foundation for an executive team.


The companys recently hired executives include Osenga, Pete Hamel, who is vice president of operations, and Bob Skattum, who is vice president of marketing and product development. Parrish is CEO and McElroy has retired from day-to-day activities.


The executive team has been working on developing training programs and systems, such as an accounting and finance system, to take the pulse of the company to understand where were at and where were going, Osenga says. Additionally, PE Systems is working on revamping its Web site and plans to start a national marketing program later this year or in early 2009. The company still must maintain a relatively low profile, however, because of the sensitive nature of the financial information it handles, he says.


We know that as we compete in the market were going to have to find ways to differentiate ourselves, Osenga says, but we cant tell too much about ourselves because of our confidentiality agreements with clients.


Contact Emily Proffitt at (509) 344-1265 or via e-mail at [email protected].