[Ditty]

Hello all, I am considering a broker position at an ISO shop and, as I am new to the business, wanted to know what the veterans here believe an average commission structure looks like for typical broker?? Any help would be appreciated...

Thanks

[MCNetwork]

New brokers who work at an ISO shop can expect around 15-20% of the commission earned by the ISO. As you get more experience, you'll climb up the scale. If you get a salary, the commission may be lower.

[CO1]

I have seen them give 300 a week, plus $300 for switch of processing, 2 points on the funding, paid every 2 and half of the broker fee; which is paid every 2 weeks.

[Ditty]

Thanks for comments, this really helps. Next question, the ISO said the commission they charge varies somewhere between 5 and 10% depending on circumstance...any thoughts on that?

[MCNetwork]

Yes that is true. Sometimes the ISO has to cut commission to sell the deal. Also, different cash advance programs have different commission structures. I've made as little as 1% on a deal and as much as 15%. Hopefully the ISO will be honest about reporting what the actual commission earned was.

[Ditty]

Understood, and thanks again for the help. I've been researching it a bit lately and it seems like there is a lot more room for this financing alternative to grow. MCNetwork, do you see a lot of new players in the industry lately? Would you say its helped in terms of lowering loan costs, or hurt your biz at all in terms of too much competition??

[Sean Cash]

When I was a rep, I got no base and earned 25% of the deal's commission including the merchant account residual. The commission on a deal could be $75 or it could be $1,000. Different on every deal.

[CO1]

MCNetwork has a good point. Find out what companies they work with and get there pay structure so you can keep track of what it is they are going about to giving you that check; and Ditty Competition is what gives this industry players us the drive, and push to get things done; this isnt an industry thinking youll make money asap but you land that one good deal you will. I have been in this industry for sometimes i have seen my checks go up and down.

[MCNetwork]

Understood, and thanks again for the help. I've been researching it a bit lately and it seems like there is a lot more room for this financing alternative to grow. MCNetwork, do you see a lot of new players in the industry lately? Would you say its helped in terms of lowering loan costs, or hurt your biz at all in terms of too much competition??

Yes there are many new players in the industry and it's made it harder to close deals. I've seen new players offering competitive rates on the types of deals that most established lenders wouldn't touch with a stick. The lure of easy money is getting in the way of common sense and many of the new players will be out of business in a year or two. Unfortunately, it's making me lose some deals in the meantime. You really need to have sharp selling skills to succeed in this market.

[CO1]

It all depends on if you are ready to hussle! always be ahead of what the merchant will say.

[Chambo]

New brokers who work at an ISO shop can expect around 15-20% of the commission earned by the ISO. As you get more experience, you'll climb up the scale. If you get a salary, the commission may be lower.

if THAT IS ALL you are getting paid, you are getting RIPPED OFF

[CO1]

The only way youll be doing good is go on your own! Get signed up with different companies and be your own broker! And find out what the resisdual is on proessing

[Ditty]

What exactly is the merchant account residual?

[Sean Cash]

What exactly is the merchant account residual?

In the payments industry, when you sign up a business to accept credit/debt cards, the account rep gets a fractional percentage of every single transaction the business does as a commission for life. The same applies if you get a merchant to change from a previous merchant services provider to a new one. In a way the payments industry is a giant MLM model with processors reselling for acquirers, mega-ISOs reselling for processors, small ISOs reselling for mega-ISOs and reps selling on behalf of small ISOs. Everyone in the chain gets a fractional piece of the action. This ongoing payout of the percentages continues for as long as the merchant stays with that merchant service provider and is a residual commission.

The real value in the early merchant cash advance days wasn't the ROI on the advances, it was the merchant accounts you could pick up. The ability to offer merchants financing was an acquisition tool to get them to switch merchant service providers so that you would get the lifetime residual payout on that account. A few accounts won't do much but sign up 500, 1,000 or 10,000 accounts and you can eventually make a cool passive six figure A MONTH income... without doing any additional work.

The ability for every processor to split-fund for merchant cash advance companies cut into the residual income market for merchant cash advance reps. Some reps would leave merchants with their current processor and earn no residual just to close the deal and get the commission on the advance. The ACH market has further cut into the residual income market because fewer and fewer deals rely on processors to split payments.

People always talk about "building up a book of business" and if you are wise to the payments industry, you can build a real book of passive income without ever having to worry about whether or not a merchant renews their funding so long as they continue to stay with the same merchant service provider. I personally did not care much about cash advance commissions in my run as a merchant cash advance rep as I was in it to acquire merchant services accounts. That's a tough business to be in now because competing ISOs and funders will tell your prospect they don't have to switch. Also, industry disrupters like Square cut out the middlemen and go direct to the merchants, paying out no residual commissions to anyone. People like to tell me Square is not a threat because they only focus on the micro-merchant market but once they have enough data to be comfortable, they and copycats will threaten the status-quo.

Don't get me wrong, there is still plenty of money to be made on merchant accounts. Even if you fund the merchant on ACH, you can actually save them a few bucks a month on processing anyway just by switching them to Benchmark merchant Services or any of the other big companies like Integrity Payments, North American Bancard, First Data, etc. etc.

Hope that helps answer your question.

[Benchmark]

Thanks Sean.

Building a processing book of business is definitely a good way to secure a long term residual income. Feel free to contact us or our Director of ISO sales, Mike Jaffe @ 212-444-9565 or Mike.Jaffe@swipebms.com

[Finance1]

Ditty, does the firm(s) you're considering joining provide the leads and/or apps? If you have to 100% self generate then IMO the way to go is just get signed up with a half dozen funding companies and keep 100% for yourself. If you need training and other things then that is a different situation. Even so, only getting 20% of deal revenue for something you generated yourself is a terrible deal.

[MCAVeteran]

what do they provide you? leads? work office? training? If the average deal is $25K for example, and, a commission is 10 points on $25K, thats $2500 your ISO gets, and, you get $500 of that $2500.

what about RENEWALS?

[Ditty]

Finance1 and MCAVeteran, thanks for the feedback. Yes, the value they provide (from they're perspective) is all of the above; full leads and marketing (online/search, print, radio), office space, training and marketing events and sponsorship. I'd get renewals as well, the only thing I'm not sure about after reading these posts are the merchant account residuals.

[MCNetwork]

Finance1 and MCAVeteran, thanks for the feedback. Yes, the value they provide (from they're perspective) is all of the above; full leads and marketing (online/search, print, radio), office space, training and marketing events and sponsorship. I'd get renewals as well, the only thing I'm not sure about after reading these posts are the merchant account residuals.

If the ISO is providing all of these things, then 20% of commission is more than fair. You'll receive invaluable training and have an opportunity to learn this industry inside and out. What good is keeping 100% of the commission if you're clueless about the industry? 100% of zero is still zero!

[Finance1]

I agree with MCN. 20% for a rookies and full support is fine. There's a lot to learn early on. Closing these deals is not easy. It's a competitive market and customer loyalty is an afterthought for most merchants.

Don't get hung up on residuals early on. Processing is so competitive and saturated that you will find the margins on the vast majority of seasoned businesses very thin already. I would have to go back through our portfolio and see the average residual per $10k/mo in processing volume to get accurate #'s but if I had to guess it's less than $40/mo. We have large processing accounts that pay much less than this and smaller accounts that pay much more. It all depends on what kind of deal the merchant already has.

Learning the card industry is probably harder than learning how MCA's and loans work but it's a great ancillary skill because building a book can pay for a long time and it can also be sold for a lump sum payment. We typically pay our inside agents just an upfront bonus for each account booked. It's just easier that way for us.

We pay our agents on renewals but at a lower % than the original funding. Our comp schedule it pretty high but that's because we only have experienced agents in house. I would prefer to keep them as long as possible rather than training new people all the time. If you get good at selling this stuff then you have some negotiating power with your ISO. They won't want to lose you so you can negotiate a higher split down the road once you prove yourself. It's not hard to find greener pastures once you know the ropes but you gotta pay your dues first. This is no easy game or get rich quick business no matter who tells you what.