[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.

[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.

[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?

[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

[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.

[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]

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

[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.

[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.

[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%.

[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.

[Michael I]

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.

exactly if the merchant comes to you ,he will save a ridiculous amount of money with your psf vs the underwriting prodigy no psf deal

[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.

[abfunders]

exactly if the merchant comes to you ,he will save a ridiculous amount of money with your psf vs the underwriting prodigy no psf deal

I was mostly referring to real estate and LOC deals.

[Michael I]

I was mostly referring to real estate and LOC deals.

dont care what it is ,offering products that you need to charge a psf fee does not make someone trash, it makes someone a better iso . Also asking a funder what they are ok with and charging that does not make you trash.

[TheUnderwritingProdigy]

dont care what it is ,offering products that you need to charge a psf fee does not make someone trash, it makes someone a better iso . Also asking a funder what they are ok with and charging that does not make you trash.

ISO's that charge PSF's dig in the trash for their leads -- the same garbage deals that are in default, or reverse consolidation, etc. that we get from all the other **** ISO's. Our top ISO's don't charge PSF's and actually gather good deals. Spend a little more money on your leads and maybe you won't have to resort to double-dipping

[Michael I]

ISO's that charge PSF's dig in the trash for their leads -- the same garbage deals that are in default, or reverse consolidation, etc. that we get from all the other **** ISO's. Our top ISO's don't charge PSF's and actually gather good deals. Spend a little more money on your leads and maybe you won't have to resort to double-dipping

so let me make sure i understand you , if you have a merchant for example that has real-estate you should only fund him a 1.59 6 month with wbl because they pay you commission and do not charge a psf rather than get him a private funder that does not pay cm and all you can do is charge a psf but get him a couple of years at 15%, You need to get out of the box and do whats best for your merchant where he is more than happy to pay a psf fee. There are no 2 situations the same, so to make a generalization is just plain ignorant

[TheUnderwritingProdigy]

so let me make sure i understand you , if you have a merchant for example that has real-estate you should only fund him a 1.59 6 month with wbl because they pay you commission and do not charge a psf rather than get him a private funder that does not pay cm and all you can do is charge a psf but get him a couple of years at 15%, You need to get out of the box and do whats best for your merchant where he is more than happy to pay a psf fee. There are no 2 situations the same, so to make a generalization is just plain ignorant

The commission structure does play a part here, I can agree on that. But let's say I fund a $10k deal and we're already taking the industry standard 5% fee so merchant nets $9,500, and then ISO turns around and takes another $500-$1,000 PSF, ON TOP of me paying them $1,200? No longevity in that kind of model. Especially when the ISO just slides in the PSF form without selling it and then the morning after funding, I have an angry merchant threatening to stop payment because they weren't sold on the PSF. No chance that merchant will renew.

[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?