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Shaw Merchant Group
Monday, January 16 2023
How to Sell Your Merchant Residual Portfolio : Residual Buyout Valuation & Acquisition

Do you know if you really own your credit card processing residuals? The best way to find out is to ask your credit card processor if they want to buy you out—that is, purchase some of your future income steams. If you need fast cash, this is a great way to go. Let's look at some of the details:

For example, what if you closed twenty deals in October, and each of those yielded $50 in profit. If you have a 50% split, then your residuals would be $25 for each account per month. This makes for about $500 dollars a month total in residuals, which is $6,000 dollars per year. Not bad, right? Especially considering that your portfolio will only increase from there.

Just like any other asset, you can sell your merchant portfolio, though. If you need cash upfront, you can sell the right to this long-term passive income to your processor. How much would they pay? Well, typically, they will pay the same as about 15 months of your residuals, which in this case is $7,500. And then they would pay you another $4,500 throughout the year ($500 x 9), depending on the retention of your accounts. That's a pretty handsome amount for closing just 20 accounts.

There are some rules to consider when you're doing a buyout, though, so let's take a look at some individual guidelines:

1.) First, the residuals need to be from a merchant account that has been activated for awhile—at least a month, but more often around three months. Why? Consider this: your processor will decide what to pay you based on the average income generated over the past three months. You don't want one or two of those months to be a 0.

2.) Selling your residuals shouldn't affect your upfront payment for closing the deal.

3.) You're more likely to get that second payment if less accounts cancel, so sometimes it's better to sell more accounts to your processor to increase your chances. Another thing you can do is to get a buyout that is 100% upfront, though usually this isn't as lucrative in the long run.

Do you feel like you're a bit more familiar with buyouts now? The above guidelines are good things to keep in mind, but how do you know when a buyout would be helpful?

1.) To break your fall when you're first getting started. Running a business can be a difficult challenge and sometimes this requires putting money upfront. It might be fine to work off savings and initial capital for a few months, but eventually you're going to have to start earning income from your business to be able to avoid running out of money. If expansion is happening slower that you thought and you need some money to put into savings or to invest in your business when you're brand new to the industry, a buyout may just help you find the liquid cash that you need without having to go into debt.

2) When you need stability. You might be tempted to go with a buyout as a way to pay for the cost of growing—for example, getting a fancy advertising campaign going, or moving to a bigger office—but don't do it. Selling your residuals is not a long-term strategy, so it should not be used to meet long-term goals like growth. You may have more money upfront, but it will obviously lower the amount of your monthly residuals. It is not worth it; the point of this business it to build your monthly income over time. Only perform a buyout when you really need liquid cash upfront to put out a fire and return your business to the status quo—not to add more complexities and growth.

When shouldn't you sell your merchant residuals? Well, there are a few situations where it's not recommended:

  • When you want to slow your business down / take time off. The buyout is something of an emergency options—it's not meant to help you relax. In fact, it is taking monthly income away from your business!
  • If you are tempted to sell more than how fast you are growing. You should always be able to replenish what you lost within a few months. If not, then don't do the buyout. Your goal should be to get those residuals coming in again. Still curious about how buyouts work? Leave a comment below.
Posted by: Scott Shaw AT 09:24 am   |  Permalink   |  Email

Becoming a Merchant Services Agent?

To become a merchant services agent, individuals typically start by gaining a strong understanding of the payments industry and sales techniques. Having a background in sales or customer service can be beneficial, as merchant services agents are responsible for acquiring new merchants and providing ongoing support to meet their payment processing needs. Building relationships with merchants and understanding their business operations is crucial for success in this role. Additionally, obtaining a bachelor's degree in business, marketing, or a related field can provide a solid foundation in key business concepts and communication skills that are essential for working as a merchant services agent.

In addition to experience and education, individuals looking to become merchant services agents may benefit from obtaining relevant certifications and licenses. For example, becoming a Certified Payment Professional (CPP) can demonstrate expertise in payment processing and merchant services, enhancing credibility with potential clients. It is also important to stay informed about industry trends, payment technologies, and compliance requirements to better serve merchants and provide value-added services. By leveraging your skills, knowledge, and professional certifications, you can establish yourself as a trusted and successful merchant services agent in the competitive payments industry.

Becoming a credit card processing agent can be a lucrative and rewarding career choice for individuals looking to enter the world of sales and financial services. By partnering with a reputable ISO (Independent Sales Organization) and offering point of sale solutions to businesses, you can earn a substantial income while helping merchants streamline their payment processing operations. In this comprehensive guide, we will cover the steps to becoming a credit card processing agent, explore the best ISO agent programs for selling point of sale solutions, and provide insights into the earning potential in the merchant services industry.

How to Become a Credit Card Processing Agent

1. Understand the Industry: Before embarking on a career as a credit card processing agent, it is essential to familiarize yourself with the payment processing industry. Learn about different types of merchant accounts, payment gateways, and processing fees to better serve your clients.

2. Obtain the Necessary Licenses: In order to legally sell merchant services, you may need to obtain a business license or register as a sales agent with a reputable ISO. Check with your local government agencies to ensure that you are compliant with all regulations.

3. Choose a Reputable ISO Partner: Partnering with a reputable ISO is crucial to your success as a credit card processing agent. Look for companies that offer competitive rates, top-notch customer service, and a comprehensive training program for their agents.

4. Complete Training and Certification: Many ISOs provide training programs for new agents to learn about the company's products and services, as well as sales techniques and industry best practices. Take advantage of these resources to build your knowledge and skills.

5. Build a Sales Strategy: Develop a sales strategy that targets businesses in need of point of sale solutions. Identify your target market, create a compelling pitch, and leverage your network to generate leads and close deals.

6. Provide Excellent Customer Service: Building long-term relationships with your clients is key to your success as a credit card processing agent. Be responsive to their needs, address any issues promptly, and go above and beyond to deliver exceptional service.

7. Stay Updated on Industry Trends: The payment processing industry is constantly evolving, with new technologies and regulations impacting the landscape. Stay informed about industry trends and innovations to better serve your clients and stay ahead of the competition.

Best ISO Agent Programs for Selling Point of Sale Solutions

1. First Data: First Data is a leading provider of payment processing solutions, offering a comprehensive suite of point of sale solutions for businesses of all sizes. Their ISO agent program provides competitive rates, dedicated support, and cutting-edge technology to help you succeed in the merchant services industry.

2. North American Bancard: North American Bancard is another trusted name in the payment processing industry, offering a range of point of sale solutions for businesses. Their ISO agent program provides generous commissions, ongoing training, and marketing support to help you grow your sales.

3. TSYS: TSYS is a global payment solutions provider known for its innovative technology and industry expertise. Their ISO agent program offers a competitive commission structure, access to cutting-edge payment solutions, and personalized support to help you succeed as a credit card processing agent.

4. Worldpay: Worldpay is a leading provider of payment processing solutions, offering a variety of point of sale solutions for businesses in various industries. Their ISO agent program provides competitive rates, marketing support, and resources to help you build a successful merchant services business.

5. Square: Square is a popular payment processing platform that offers point of sale solutions for small businesses. Their ISO agent program provides a simple and straightforward commission structure, as well as access to Square's suite of payment processing tools and services.

Earning Potential in the Merchant Services Industry

1. Commissions: As a credit card processing agent, you can earn commissions on every sale you make, typically ranging from 0.25% to 1% of the transaction volume. Some ISOs may offer additional bonuses or incentives for meeting sales targets or acquiring new clients.

2. Residual Income: In addition to upfront commissions, many ISO agent programs also offer residual income, which is a percentage of the ongoing transaction volume generated by your clients. This can provide a steady stream of passive income over time as you build your client portfolio.

3. Additional Revenue Streams: In addition to commissions and residual income, credit card processing agents may also earn revenue from ancillary services such as equipment leases, payment gateway fees, and value-added services. These additional revenue streams can further boost your earning potential in the merchant services industry.

4. Growth Opportunities: The merchant services industry is growing rapidly, with businesses of all sizes looking for innovative payment processing solutions. By building a strong client base and providing excellent service, you can expand your business and increase your earning potential over time.

5. Financial Freedom: With the right skills, dedication, and strategic planning, credit card processing agents have the potential to earn a substantial income and achieve financial freedom. By leveraging the resources and support provided by reputable ISOs, you can build a successful merchant services business and enjoy a rewarding career in the payment processing industry.

In conclusion, becoming a credit card processing agent can be a rewarding and lucrative career choice for individuals looking to enter the world of sales and financial services. By partnering with a reputable ISO, offering point of sale solutions to businesses, and providing excellent customer service, you can build a successful merchant services business and achieve financial freedom in the payment processing industry. With the right training, support, and determination, you can unlock your earning potential and thrive in this dynamic and growing industry.

With the rapid growth of e-commerce and online transactions, the demand for payment processing services has increased substantially. White label payment processing is a business model where a company offers payment processing services to merchants under their own brand name.

What is White Label Payment Processing?

White label payment processing is a service where a company provides payment processing services to merchants under their own branding. This means that the merchant will see the payment processor's branding, but the processing service is actually provided by a third-party company.

The white label payment processing provider takes care of all the technical aspects of payment processing, including payment gateways, security, and compliance, while the merchant focuses on growing their business.

Advantages of White Label Payment Processing:

1. Flexibility: White label payment processing allows merchants to customize the payment process to meet their specific requirements.

2. Branding: Merchants can ensure that the payment process aligns with their brand image, enhancing customer trust and loyalty.

3. Cost-effective: White label payment processing eliminates the need for merchants to invest in developing their payment processing system, saving them time and money.

4. Technical support: White label payment processing providers offer technical support to merchants, ensuring a smooth payment process.

How to Start Your Own Payment Processing Company

1. Research the Market: Before starting your payment processing company, it's crucial to research the market to understand the demand, competition, and potential opportunities.

2. Develop a Business Plan: Create a detailed business plan outlining your target market, revenue model, marketing strategy, and financial projections.

3. Obtain the Necessary Licenses: To operate a payment processing company, you will need to obtain licenses from regulatory authorities. Ensure you comply with all legal requirements.

4. Choose a White Label Payment Processing Provider: Select a white label payment processing provider that meets your requirements in terms of features, pricing, and customer support.

5. Customize Your Branding: Customize the payment processing service with your branding and integrate it seamlessly with your website or platform.

6. Market Your Services: Promote your payment processing services to merchants through marketing campaigns, partnerships, and networking events.

7. Provide Excellent Customer Support: Offer excellent customer support to merchants to build long-term relationships and grow your business.

How Much Does It Cost to Become a Registered ISO for Merchant Services?

To become a Registered ISO (Independent Sales Organization) for merchant services, there are several costs involved, including:

1. Registration Fees: The registration fee to become an ISO can range from $500 to $5,000, depending on the payment processor and the services offered.

2. Compliance Costs: ISOs are required to comply with industry regulations, which may involve additional costs for training, audits, and certifications.

3. Technology Costs: ISOs need to invest in technology infrastructure, including payment gateways, security systems, and software development.

4. Sales and Marketing Costs: ISOs need to allocate budget for sales and marketing activities to promote their merchant services and attract new clients.

5. Miscellaneous Costs: Other costs may include insurance, legal fees, and operational expenses.

In conclusion, white label payment processing is a valuable business opportunity for entrepreneurs looking to enter the payment processing industry. By partnering with a white label payment processing provider, you can offer payment processing services under your brand name, providing a seamless experience for merchants. Starting your payment processing company requires thorough research, planning, and investment, but with the right strategy and dedication, you can build a successful business in this growing industry.

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    Shaw Merchant Group is a registered DBA of EPX, a registered ISO of BMO Harris Bank N.A., Chicago, IL, Fresno First Bank, Fresno, CA, and Citizens Bank N.A., Providence, RI.

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