[WhoisKingsley]

Let me respond in pieces...

1. I don't think you hate being that person, you thrive/survive/flourish on drama and rocking the boat, like most of us do LOL.
2. I cant speak for "Contracts you've received from us 3rd Party"
3. Not sure where you arrived at 6% and 25% fees? Please explain
4. Like I said previously I can only speak for my team which does everything in its power to keep the fees in our 2-5% range and we do that on 95% of our files

Before anyone jumps all over me with examples of the time their merchant paid 6% etc etc please keep in mind that I am happy to discuss and assist you in any way possible but getting berated with generalities about "that one deal" wont help your cause.

Let me respond in pieces...
1. I thrive and flourish on the responses, yes. There are a lot of contradictions and overall conflicts that will not be fixed, innovated, or stopped if someone didn't be that person. Sometimes I chose to be that person. So yes Andy, I deserve every response coming from it all lol!
2. I'll go over with you via email on the last contract and you can clear the air.
3. My old agreement I had. Keep in mind- these were my OWN originated deals. Not brokered so I didn't care too much. Relationships and knowing where my deal was and that it wasn't going anywhere was enough for me
4. Your team has been great so far! No problems, very transparent... I heart YSC. I guess it's just the fact that all teams are different with different pricing throws everyone off when they read one thing and see another.

[FoxIso]

Ben, the only thing I can think of with the additional $5-20/day you saw there is that the broker sent out his own mini-agreement to the merchant for an additional $5K, saying something like: "The max they approved you for is $25K, but I'll give you another $5K separately if you sign an agreement with me at (say $20/day)."

Either that, or the broker sets their own fee of $5K for a $70K deal, and agrees to be repaid that fee in daily increments instead of a lump sum, so as to alleviate the feeling of $5K just coming out of the account right after the merchant got funded, when they needed every penny of that money.

Who knows what's going on in the industry these days???

This is the thing that makes the most sense. The problem being is that when I asked him about it he told me it was syndication. I would almost rather he had been lying about it then have him be pulling some crazy nonsense with syndication.

[AndyYSCISOdept]

Let me respond in pieces...
1. I thrive and flourish on the responses, yes. There are a lot of contradictions and overall conflicts that will not be fixed, innovated, or stopped if someone didn't be that person. Sometimes I chose to be that person. So yes Andy, I deserve every response coming from it all lol!
2. I'll go over with you via email on the last contract and you can clear the air.
3. My old agreement I had. Keep in mind- these were my OWN originated deals. Not brokered so I didn't care too much. Relationships and knowing where my deal was and that it wasn't going anywhere was enough for me
4. Your team has been great so far! No problems, very transparent... I heart YSC. I guess it's just the fact that all teams are different with different pricing throws everyone off when they read one thing and see another.

And YSC hearts you too.

[ridextreme]

Tell the merchant the fee is for X, when it is really for Y? Wire Fraud

yes and that should go without saying but credit guy is suggesting people who charge fees should get locked up. (merchants who send fraudulent bank statements are the ones who should get locked up)

[Funder Mark]

Definitely the merchant who sends in fraud docs.

[ADiamond]

ISOs, how many of you are charging your own fees?

I have no problem with this. We all need to make the most amount of money while retaining our merchants as clients.
We've recently just dropped our default PSFs/origination fees to 0% (the ISO still has the option of raising the fee if they so wish)

But I get the feeling that one of the reasons that there was push back on the fee was because of ISOs who charge their own fees on apps or on Funding.
Is this feeling wrong?

as a lender why would I make my processing fees $0 to justify the ISO charging a PSF on top of the commission I'm paying them? that is the most absurd thing i've heard of.. if the merchant doesnt want to pay the broker fees and wont do the deal then leave it up to the ISO to know that to get the deal done, he has to settle for the commission he's being paid and not be greedy. lenders have expenses also, so for a lender to drop their fees so the iso can go ahead and charge a 10% fee on top of the commission is ridiculous.

[Funder Mark]

Good point, but what about funders who charge crazy fees? I have seen offers which came with a 10% fee.

[Michael I]

as a lender why would I make my processing fees $0 to justify the ISO charging a PSF on top of the commission I'm paying them? that is the most absurd thing i've heard of.. if the merchant doesnt want to pay the broker fees and wont do the deal then leave it up to the ISO to know that to get the deal done, he has to settle for the commission he's being paid and not be greedy. lenders have expenses also, so for a lender to drop their fees so the iso can go ahead and charge a 10% fee on top of the commission is ridiculous.

Your whole issue is because then the iso will charge his fee .so basically you're being greedy as a lender because why not charge more fees over the factor .

[ADiamond]

funder mark-
at the end of the day lenders fees are probably negotiable, just like the ISO's PSF.

lenders charging that much can get away with it because theyre probably giving a 6 figure 5th-6th position offer (example) when no one else will.

if the rep can get the same offer from another lender with less fees, watch how quick that original lender will drop their fees.

this is such a competitive, over-saturated space right now - people are learning from everyone else's mistakes. i give an offer for 20k, rep brings back a contract for 25k, i bump mine up to 26,500. they're charging $705 in fees? I'm charging $649.

if lenders aren't willing to work with their ISO's to close deals then they may as well close their shop. and that relationship goes both ways.

Michael I-
No, My issue is the lender dropping their fees to $0 so the rep can sell his PSF. did you read the original post before you let your fingers talk?

[AndyYSCISOdept]

Look there are two ways to look at this.

1. Either you both charge a reasonable fee for service (Broker and Funder) OR....
2. You both agree that the factor rate and the agreed commish are enough to satisfy you pocketbooks hunger and move on

Don't try and out maneuver one another and get one to lower their fee while taking the whole of yours.

[Chambo]

as a lender why would I make my processing fees $0 to justify the ISO charging a PSF on top of the commission I'm paying them? that is the most absurd thing i've heard of.. if the merchant doesnt want to pay the broker fees and wont do the deal then leave it up to the ISO to know that to get the deal done, he has to settle for the commission he's being paid and not be greedy. lenders have expenses also, so for a lender to drop their fees so the iso can go ahead and charge a 10% fee on top of the commission is ridiculous.

Because Reps lie tot he merchants and tell them the fee is how they get paid....

Another case of misrepresentation, and ergo, wire fraud

[AndyYSCISOdept]

Easy with the F word there Chambo, because you KNOW. LOL...

[Chambo]

Chambo Knows.jpg

[FUNd]

Easy with the F word there Chambo, because you KNOW. LOL...

Know what? That BOB will give you a moral high-ground browbeating within an inch of your life?

[AndyYSCISOdept]

Know what? That BOB will give you a moral high-ground browbeating within an inch of your life?

Im still licking my moral high ground censorship laceration wounds

[J.Celifarco]

Look there are two ways to look at this.

1. Either you both charge a reasonable fee for service (Broker and Funder) OR....
2. You both agree that the factor rate and the agreed commish are enough to satisfy you pocketbooks hunger and move on

Don't try and out maneuver one another and get one to lower their fee while taking the whole of yours.

the key word here in the post is "REASONABLE" I am not talking about you particularly Andy because honestly i have no idea what you charge, but when it is reasonable I have no problem but if a lender wants to charge north of of a 1.40 any fee that is more then a couple of % points is not reasonable. Also Any bank that changes the fee base don the deal I think is insane. When i sign up with a bank I want to know what fees they charge upfront and I expect that to be consistent across the board. Fees should not change based on risk on a deal a fee should be consistent across the board all deals that a funder does. Risk should effect the factor rate and term on a deal a fee is a % and or dollar amount that a funders deems fair for the work that they do on a deal

[AndyYSCISOdept]

I an appreciate that. However, if you are having me do something outside of my comfort zone because we have a relationship (which you and I both preach about tirelessly) would it not be okay for me to charge a 4% fee versus 3% because of my inherent risk due to the fact that I'm scared of this deal defaulting?

Before everyone says, YOU SHOULDNT FUND THE DEAL THEN, consider this...If we follow that ine of thinking, a TON of larger funders would be out of business if they killed a deal because they thought it was risky and didn't do a solid for that broker that sends a ton of business their way.

[J.Celifarco]

I an appreciate that. However, if you are having me do something outside of my comfort zone because we have a relationship (which you and I both preach about tirelessly) would it not be okay for me to charge a 4% fee versus 3% because of my inherent risk due to the fact that I'm scared of this deal defaulting?

Before everyone says, YOU SHOULDNT FUND THE DEAL THEN, consider this...If we follow that ine of thinking, a TON of larger funders would be out of business if they killed a deal because they thought it was risky and didn't do a solid for that broker that sends a ton of business their way.

put the % in the factor or handle the risk by shortening the term. In my opinion a fee should be a set % or $ amount for services rendered and should have nothing to do with the risk on a deal. Just from a sales perspective when the fee changes from deal to deal makes it impossible to properly set expectations for a merchant. I know going in to 99% of the deals I do that is a merchant asks me are there any extra fees or costs I can answer the question honestly because I know what the banks I work with charge on any deal I fund with them. If the number changes deal to deal then I can be honest with the merchant which puts me in a bad spot

[AndyYSCISOdept]

See typically the way I do it is, when I send you a pre approval it looks like this...keep in mind total example

Funded Amount- 25,000
Daily payment $299
Payback Amount - 36,000 (1.40FR)
Fee/Origination - 750 (Merchant Nets 24,250)

That tells the ISO (In my humble opinion) exactly what I feel the merchant is worth to me and can handle, you want to charge above and beyond... go head.

[J.Celifarco]

See typically the way I do it is, when I send you a pre approval it looks like this...keep in mind total example

Funded Amount- 25,000
Daily payment $299
Payback Amount - 36,000 (1.40FR)
Fee/Origination - 750 (Merchant Nets 24,250)

That tells the ISO (In my humble opinion) exactly what I feel the merchant is worth to me and can handle, you want to charge above and beyond... go head.

just different ways of looking at it. Being up front with it helps I just think by the way a deal is structured term and factor equate to the risk and a fee is a set amount for work done on all deals back end expenses cost of underwriting etc. As a funder you can charge what you want and set yourself up however you like you take the risk funding deals so you can do as you will. Me as someone who is submitting deals a set fee is something I do look for when looking at different banks

[CreditGuy]

To look at it another way, think like an accountant. The deal itself and the cash flows (P&I) that stem from it post funding, should cover all the credit risk; hence, the point John is making that the capital at risk, duration, and pricing should live in the deal since these are the three main mitigants of credit risks. The o-fee is booked to general revenues upon funding to cover overhead/originations costs, so it lives outside the deal and should be static.

[ridextreme]

lenders have expenses also, so for a lender to drop their fees so the iso can go ahead and charge a 10% fee on top of the commission is ridiculous.

the lender shouldn't really talk though, charging 150% APR to merchants who are hurting for cash

[Michael I]

the lender shouldn't really talk though, charging 150% APR to merchants who are hurting for cash

no 150% is not enough when they renew they need to double the interest and make it 300% . I never understood that since i started in the industry . He is a good merchant been paying , logic says give him a better deal . but no they need to charge him double interest and screw the merchant loyal to them in the *** . Then they complain that he stacks when that was the cheaper option for him

[FUNd]

no 150% is not enough when they renew they need to double the interest and make it 300% . I never understood that since i started in the industry . He is a good merchant been paying , logic says give him a better deal . but no they need to charge him double interest and screw the merchant loyal to them in the *** . Then they complain that he stacks when that was the cheaper option for him

Supply and demand. When merchants stop paying the rates, the investors will either lower their cost of funds or lower their flags and go home. Until then, the cost of these instruments will stay where they are.

Same reason crack is $20 a rock and not $2. It's what people will pay for it.

[YuliyaG]

Supply and demand. When merchants stop paying the rates, the investors will either lower their cost of funds or lower their flags and go home.

The FED plans to raise interest rates to 3.3% by 2019. It makes me shudder to think of how that will impact the industry. What's going on now is that fewer people are starting businesses, more businesses are failing more rapidly and toss in higher cost of capital for everyone (funders and merchants), things will get interesting. There will certainly be more defaults and a lot fewer successful brokers. I struggle to see how the industry can have sustainable growth into the next decade without shifting the tectonic plates around a bit... just my two cents.