[Quickfunder]

I just received a high approval but the underwriter stipulated a Max Upsell restriction at 5 pts. The program is for 12 mths. I'm wondering why they would do that if it both limits the commission I can make and how much they can make back. And according to their ISO portal, when I plug in the numbers for higher upsell -- the numbers remain approved and not out of the allowed range. Kind of taken aback by this one.

[GRP Funding]

If you are on buy rate pricing, the 5 pt cap has no impact on what they would make. Only what you can make. I wonder why though. Is it a custom program they put together to help you win a deal? I could see that happening if you brought a deal and said you needed a certain rate to win the deal. If they went way below their normal buy rate to help you win, I guess I could understand them capping the upsell.

[J.Celifarco]

I have to agree with Brian, the only reason I can see them limiting the upsell is if they made an exception on the buy rate. If not then that is weird and I would address it with someone at that bank

[Chambo]

I just received a high approval but the underwriter stipulated a Max Upsell restriction at 5 pts. The program is for 12 mths. I'm wondering why they would do that if it both limits the commission I can make and how much they can make back. And according to their ISO portal, when I plug in the numbers for higher upsell -- the numbers remain approved and not out of the allowed range. Kind of taken aback by this one.

?Usual buyrates have max upsell limits of 10-15 points. If they capped you at 5 points, there was a reason and some concession made.

[Quickfunder]

No concession was made. Fit their criteria and qualified for a preferred platform. The way I see it is that the bank wants the stellar deal but not at the expense of charging the merchant more money and paying a high amount out to the rep - given that whatever upsell there is, it goes to the rep. This is buyrate btw.

[Jared_Weitz]

No concession was made. Fit their criteria and qualified for a preferred platform. The way I see it is that the bank wants the stellar deal but not at the expense of charging the merchant more money and paying a high amount out to the rep - given that whatever upsell there is, it goes to the rep. This is buyrate btw.

Would making more than 5% bring the cost of funds up to where the payback would be taking more than X% of the merchants monthly gross which breaks the UW guidelines? Maybe that's why you were capped?

[CASHCASH]

Just trying to think about it from their viewpoint... if they had gone to run credit and had seen that other funding companies had also run credit they could have assumed there may be competition. In their shoes I might do the same to ensure that the deal gets done rather than risk it being pitched too high and not sold because of a better offer. In a situation like this I would hope they would at least tell you this was the case though, but this is one scenario where that max upsell might be plausible.

[MCNetwork]

If it's a high approval, then there is a lot of capital at risk. The funder doesn't want you to add to default risk by jacking up their payback too much. I see this being done with 150k+ deals.

[J.Celifarco]

Just trying to think about it from their viewpoint... if they had gone to run credit and had seen that other funding companies had also run credit they could have assumed there may be competition. In their shoes I might do the same to ensure that the deal gets done rather than risk it being pitched too high and not sold because of a better offer. In a situation like this I would hope they would at least tell you this was the case though, but this is one scenario where that max upsell might be plausible.

Its not the banks place to make that assumption. As the ISO or the closer on the deal it is up to them to decide what they want to sell. The bank should not be getting involved with that. If the bank wants to inform the ISO that there has been credit pulls recently and that there may be competition on the deal fine, but they shouldn't take it upon themselves to cap the commission.

[Chambo]

Its not the banks place to make that assumption. As the ISO or the closer on the deal it is up to them to decide what they want to sell. The bank should not be getting involved with that. If the bank wants to inform the ISO that there has been credit pulls recently and that there may be competition on the deal fine, but they shouldn't take it upon themselves to cap the commission.

if the ISO demanded a certain buy rate to make the deal competitive...and if this rate is out of the box, then by all means they can

[JSL23]

I would think they had some reason to cap the buy-rate, but they should let him know why so everyone is on the same page. Still, a Lender should not play God with someone's livelihood. It is the ISO's client. He brought the Merchant to the table and did all the work. Who knows how much he spent in marketing to acquire this Merchant. Maybe it was through a referral partner. If they want to cap it then they should have just given him __ points on the ISO Agreement in the first place.

If there is another Lender that could potentially give similar terms, I would take it to them. If the daily pull exceeds the percentage they can take, they should lower the buy rate a few points. If I was the ISO in this case, sure, I might want to "see it from the Lender's point of view" just so I can understand and possibly avoid it in the future, but I'd be very unhappy if they arbitrarily capped it at 5 or 6 points. By doing so, they are not honoring their end of the agreement.

Situations like this are what cause a rift between ISOs and Lenders. They don't want us to stack or bring him to someone else, but they only pay 50% of the original commission on a renewal for the NET amount. They renig last second for BS reasons and make you look like a schmuck, etc, etc. Buy Rates are created by Lenders. We are trying to make a living on a system created by them.

In all fairness, we don't know the full story, but some middle ground should be found here....maybe add a 2-3 point bonus

[J.Celifarco]

if the ISO demanded a certain buy rate to make the deal competitive...and if this rate is out of the box, then by all means they can

If thats the case then absolutely they can, but from how this was explained that did not seem like the case

[jbrown]

"I would think they had some reason to cap the buy-rate, but they should let him know why so everyone is on the same page. Still, a Lender should not play God with someone's livelihood. It is the ISO's client. He brought the Merchant to the table and did all the work."

I agree with the concept and the ISO is free to take his client elsewhere. However it does seem that the funder is being transparent that for whatever reason, the commission the ISO will earn is reduced. If this were after the deal funded, that would be shady. I suspect there is a good reason, and the funder should share that with the ISO. If the ISO doesn't like the reason or the offer, take the deal elsewhere.

[JSL23]

"I would think they had some reason to cap the buy-rate, but they should let him know why so everyone is on the same page. Still, a Lender should not play God with someone's livelihood. It is the ISO's client. He brought the Merchant to the table and did all the work."

I agree with the concept and the ISO is free to take his client elsewhere. However it does seem that the funder is being transparent that for whatever reason, the commission the ISO will earn is reduced. If this were after the deal funded, that would be shady. I suspect there is a good reason, and the funder should share that with the ISO. If the ISO doesn't like the reason or the offer, take the deal elsewhere.

Agree 100%.

[Quickfunder]

Hey guys,

First off, I really appreciate everyone's response. Proud to see a like-minded group here that can look out for each other.

To reiterate - there was nothing wrong with the structure of the deal that should have restricted our commission. I just think it happened to be so large a deal that the funder did not want to add further debt to the deal already that big. But it should all be relative and proportionate, of course.

Once confronting the lender, they took off the restriction and have been otherwise cooperative and helpful. I'm sure they realized we had other options.

I would just caution all the other ISO's out there to stand your ground. It's not as if we have a union so coming here to report these issues is a good asset.

JSL23 - thanks for telling it straight. I think I am going to start a thread on what we ISO's need to start incorporating into our agreements with these lenders. I don't have the time to deal with the BS from deal to deal.

[Chambo]

JSL23 - thanks for telling it straight. I think I am going to start a thread on what we ISO's need to start incorporating into our agreements with these lenders. I don't have the time to deal with the BS from deal to deal.

This sounds like a noble cause in theory.

However

If you are not submitting volume or have a stronghold form which to fight back, that MCA will simply tell you to kick rocks

when negotiating, come from a position of strength.. Otherwise, you just come across as a trouble maker and a whiner

Anyway, my two cents.

[Quickfunder]

This sounds like a noble cause in theory.

However

If you are not submitting volume or have a stronghold form which to fight back, that MCA will simply tell you to kick rocks

when negotiating, come from a position of strength.. Otherwise, you just come across as a trouble maker and a whiner

Anyway, my two cents.

The irony of that, Chambo, is no one wants to submit after being stepped on. There's plenty of lenders out there now that are happy to take on new business. We need standard practices that range from this issue to exclusivity on first submission, same comm. for renewals, etc. It's a long list.

[Eddie.deangelis]

Has anyone been able to negotiate CAN to full commission on renewals. I had them budge from 3% - 5% but that's still ****. I think the 50% commission on renewal is a joke. It's the lender basically incentivizing you to bring the client elsewhere and get full commission. It's such bad business and makes no sense. Not very smart in my opinion. There are many many lenders that offer full commission on re-ups and more and more popping up every day so choose your lenders wisely. Once they see the business dropping they will know why and eventually turn around.

[JSL23]

Has anyone been able to negotiate CAN to full commission on renewals. I had them budge from 3% - 5% but that's still ****. I think the 50% commission on renewal is a joke. It's the lender basically incentivizing you to bring the client elsewhere and get full commission. It's such bad business and makes no sense. Not very smart in my opinion. There are many many lenders that offer full commission on re-ups and more and more popping up every day so choose your lenders wisely. Once they see the business dropping they will know why and eventually turn around.

@Eddie-50% on renewal is a joke. One fairly well known Lender offered the same terms to us recently and we just did not sign the ISO Agreement. Same with CAN, if they keep refusing to give you the full amount on renewal (or at least 75%) then F**k 'Em! Just don't sign with them. Now, we are one boutique firm with a handful of people doing about $1-$1.2 million a month. It's spread out, so you have to figure CAN would get 10% of that at most. What do they care? Drop in the bucket to them. But what if all new ISO's stopped signing ISO Agreements with them, how would they feel?

We were visited by a couple of people from one of the Largest, most well known Lenders this week. They asked us why we hardly send anything and we told them because of a weak amount up front and even less on the renewals, we have no incentive to send them your way. They came to our office and told us they are changing it up to a fair buy-rate and same on renewals. They listened to their ISOs and made wholesale changes. Credit to them.

To the Lenders on this board: 50% on the renewals: WHAT'S UP WITH THAT?? Seriously, why would you continue to engage in this practice. You have already made your money and are about to get more; Is it greed? Does it make.....some kind of sense? Help me understand.

[MTY MSI]

In addition to the funders who pay only 50% on renewals the ones that contractually demand 1st right of refusal on every single submission are to be avoided like the plague. As others on this thread have stated perhaps sooner or later they'll realize they're costing themselves business and change their ways but in the case of a behemoth like CAN probably not owing to their large inside sales force. It certainly isn't difficult to find funders willing to pay full commissions on renewals and who don't demand 1st right of refusal on every single submission.

[Eddie.deangelis]

Thanks for the responses guys ! It is good to know many of us are all on the same page. It's just bad business and greed. Maybe CAN feels that once they get the client no one can take them away because when asked for a payoff letter they then solicit the clients with super low rates and tell them they can re-up them right now. One way to stop your client from a CaN renewal and only get 3 points is to just get them an easy 2nd position, save the client money from the double dip refi and get your full commission, CAN will not renew them once they see the 2nd position. That's one defense to the 3 point renewal bull____t !! Thoughts ?

[Eddie.deangelis]

There has been many deals that come across my desk now that normally I would send to CAN first but the renewal commission is now fresh in my head and I have been sending many deals elsewhere. This is the only downside to CAN and hopefully they see it as well.

[JSL23]

The Lenders still have not answered my question:

Why is it that you (some of you at least) pay only 50% of the original commission on a renewal?

[@jeannette]

Retail Capital pays the same on New as Renewal. We have found that renewals actually perform better.
I believe the reason that they pay less is they feel that they have a handle on the merchant and there is no need to pay a full commission on it. Years ago when I worked at AMI we paid less in renewal justifying that we did not make enough margin on the first deal.

[Eddie.deangelis]

I agree J, they feel they do not need the ISO at that point to maintain the client.