[kevin85k]

Hello Everyone, This is to all the Brokers out there. Are you charging the merchant a PSF Fee? If so how much? And when do you send it? Right after they sign their contracts? Before they sign it? I appreciate everyone's feedback and be well!

[TheUnderwritingProdigy]

Respectable ISO's do not pull PSF's. Those who do are trash IMO.

[kevin85k]

Respectable ISO's do not pull PSF's. Those who do are trash IMO.

I respect your perspective, but a lot of ISO's do charge a PSF. I'm not saying it's right but it's absolutely done.

[Michael I]

Respectable ISO's do not pull PSF's. Those who do are trash IMO.

total opposite in some cases .If you are only helping your merchant with products that pay cm than who is the trash?

[TheUnderwritingProdigy]

total opposite in some cases .If you are only helping your merchant with products that pay cm than who is the trash?

If you're already making 12 points on the file, then no, you shouldn't need to charge an additional PSF. All it does is put a bad taste in the merchants mouth and impact the success of future fundings. Short term greed will not pay off in the long run in this industry. That's why all the top ISO shops never charge PSF's because they understand the value of maintaining a merchant past initial funding.

[Michael I]

If you're already making 12 points on the file, then no, you shouldn't need to charge an additional PSF. All it does is put a bad taste in the merchants mouth and impact the success of future fundings. Short term greed will not pay off in the long run in this industry. That's why all the top ISO shops never charge PSF's because they understand the value of maintaining a merchant past initial funding.

and if you are not offering your merchants products that pay ZERO or a little cm, Who is doing short term greed?

[abfunders]

and if you are not offering your merchants products that pay ZERO or a little cm, Who is doing short term greed?

If the lender doesn't give commissions, or they're too little in my opinion, then I always get a fee agreement up-front before either submitting, or before introducing the borrower to the lender. I never spring it on the merchant last minute, and the lender always knows about it. I don't charge up-front fees, it's a fee agreement to be paid upon success.

[ridextreme]

Respectable ISO's do not pull PSF's. Those who do are trash IMO.

Most all ISO's charge a PSF. When you purchase a vehicle and they charge a "Bank fee", "Dealership fee" or "Inventory fee", does that mean all the major card dealerships are "trash"? When you stay at a hotel in Vegas and they charge a "resort fee" are they trash too? Are mortgage loan companies trash for charging a closing fee?

Maybe take a quick lesson on free enterprise economics before you start calling all of your colleagues trash.

[Max Upsell]

Since most of this forum is a high-risk lender circlejerk, the industry standard for PSFs by ISOs is 10%

You can be salty about it but its the truth. Your biggest ISOs will charge 10% on deals you fund.
Not justifying it, but it is what it is.

[TheUnderwritingProdigy]

Most all ISO's charge a PSF. When you purchase a vehicle and they charge a "Bank fee", "Dealership fee" or "Inventory fee", does that mean all the major card dealerships are "trash"? When you stay at a hotel in Vegas and they charge a "resort fee" are they trash too? Are mortgage loan companies trash for charging a closing fee?

Maybe take a quick lesson on free enterprise economics before you start calling all of your colleagues trash.

Your argument is flawed because in this scenario broker is already being paid commission, so there's no reason your greedy ass needs to double-dip and get paid a 2nd PSF commission on top of what the funder is paying you. I pay 12 points on all deals and NONE of my best ISO'S charge a PSF ever.

[ridextreme]

I pay 12 points on all deals and NONE of my best ISO'S charge a PSF ever.

Yeah, ok... none that you know of, that is.

[Max Upsell]

Respectable ISO's do not pull PSF's. Those who do are trash IMO.

I agree, because every ISO pulls fees and this entire industry is trash

[Ericr123]

Depending on the funding amount, For bigger amounts, we like to give the merchant some room to breathe with the capital so for larger deals we would set up recurring weekly debits for the total amount.

Up to 10% as max. 3.5- 5% on micros.

[Ifunddaily]

Depending on the funding amount, For bigger amounts, we like to give the merchant some room to breathe with the capital so for larger deals we would set up recurring weekly debits for the total amount.

Up to 10% as max. 3.5- 5% on micros.

lmaooo at 10%!! that's comical considering merchants pay about 5% OFEE to funder while paying 1.45 taking 10% on top of that should be a felony

[Michael I]

Hello Everyone, This is to all the Brokers out there. Are you charging the merchant a PSF Fee? If so how much? And when do you send it? Right after they sign their contracts? Before they sign it? I appreciate everyone's feedback and be well!

before you send contract or with it , as far as how much it depends on how much the funder and merchant are ok with if any

[Lmonus]

A PSF above 5% is a bit excessive in my opinion. However, if the merchant is aware and understands the exact amount they will be netting after all fees are processed, any amount is fine as long as there are no issues after funding.

In some cases the merchant calls the funding company to complain about the PSF which puts the balance of the advance at risk. As long as there are no surprises there should be no issues.

I will say though, Most of my top ISO's dont charge a PSF and if they do, its about 1-2%.

[ClearFund]

Most ISO's charge PSF's - this is the nature of the business, so for all the people saying that ISO's shouldn't charge PSF's and if they do they're greedy, I ask you if 1.499's aren't greedy?!

But there's context:

Merchant should be aware of it at the time of funding.
Funders should be aware of it at the time of funding.
If an issue arises post funding due to the PSF - it's on the ISO to handle or refund, not the funder.
Fees should not be excessive (Don't ask what excessive means, we've seen ISO's pulling 20% PSF's on deals)
A deal should NEVER default because an ISO pulled a PSF without clear consent from the merchant.

Are there a nice amount of ISO's that choose not to charge PSF's and in return they have much better renewal rates? of course, but all in all PSF's are standard in this industry - live with it.

[Magicmike18]

Honestly it really comes down to how many points I'm making on file if I'm making 10+ theres no reason to be a pig and charge a psf fee. If less I will but like 2%-3%.

[TheUnderwritingProdigy]

honestly it really comes down to how many points i'm making on file if i'm making 10+ theres no reason to be a pig and charge a psf fee. If less i will but like 2%-3%.

^this.

[Michael I]

^this.

Glad to see your your coming around ,not ALL psf are trash

[abfunders]

As I've said many many times.... we brokers work for ourselves, but out obligation is to bring people who need money to people who have money and want to give it out to make a return, in whatever form that may be. As long as both sides are happy with their solution, they are generally okay with the broker making some extra money.

That being said, this is a working theory, please help me make it better, just thought of it now:

Nobody "deserves" someone else's money. There's a market that creates the pricing, and I guess to put it in modern terms, there's no "fiat" value of how it "should" be, it acts more like a commodity, adjusting itself to demand and risk. So as long as the money is being dolled out in a way that the risks and rewards are taken into account from all sides, then it's "fair" and not "greedy." It's never really "unfair," it's just that underwriters are dictating what they calculate the risk-reward is on this investment/loan/advance. "Greedy" would be intentionally overleveraging the client out of business just to sue them, or a hostile takeover.

I'm interested in developing this train of thought..... any other insights?

[ClearFund]

As I've said many many times.... we brokers work for ourselves, but out obligation is to bring people who need money to people who have money and want to give it out to make a return, in whatever form that may be. As long as both sides are happy with their solution, they are generally okay with the broker making some extra money.

That being said, this is a working theory, please help me make it better, just thought of it now:

Nobody "deserves" someone else's money. There's a market that creates the pricing, and I guess to put it in modern terms, there's no "fiat" value of how it "should" be, it acts more like a commodity, adjusting itself to demand and risk. So as long as the money is being dolled out in a way that the risks and rewards are taken into account from all sides, then it's "fair" and not "greedy." It's never really "unfair," it's just that underwriters are dictating what they calculate the risk-reward is on this investment/loan/advance. "Greedy" would be intentionally overleveraging the client out of business just to sue them, or a hostile takeover.

I'm interested in developing this train of thought..... any other insights?

Looks like you've been studying lots of Crypto lately - hence the terminology.

[Yankeeman07]

When a merchant does NOT in some manner authorize the PSF Deduction from his/her bank account,
a broker will have issues -

Without going into a drawn out explanation - NACHA Regulations have a return & a Claw back Period:
https://www.nacha.org/rules/return-q...le-transaction

[ryanh]

If you are pulling a PSF on an MCA that is an excellent way to lose a client in an industry that already has an absurdly high customer acquisition cost. If you are charging a PSF on a client who is even remotely going to be a good client a lot of brokers like myself are being provided free ammunition to persuade a merchant to never go back to you. Short sighted thinking.

PSF's outside of MCA's on deals with longer time tables that require considerable work with thinner margins are 100% reasonable.

[ridextreme]

If you are pulling a PSF on an MCA that is an excellent way to lose a client in an industry that already has an absurdly high customer acquisition cost. If you are charging a PSF on a client who is even remotely going to be a good client a lot of brokers like myself are being provided free ammunition to persuade a merchant to never go back to you. Short sighted thinking.

PSF's outside of MCA's on deals with longer time tables that require considerable work with thinner margins are 100% reasonable.

I find it to be the opposite - usually the longer term thinner margin deals have strong credit and wouldn't even sign a PSF to begin with. When to charge or not to charge a PSF and now much depends on the deal. If it's an A paper deal, you might lose the deal if you charge one but if it's a 550 credit and 2nd pos. deal and you don't charge a PSF you're definitely leaving money on the table.