Selling Your Merchant Services Business | Overview

Saturday, April 16 2022

There are lots of reasons why building a merchant services business can be extremely lucrative, not the least of which is the fact that you can build a lasting asset (your residuals), which you can then sell. In fact, I spoke to someone in the industry today, and he was telling me all about his plan when he leaves the business and how he's planning to sell his residuals. What that conversation made me realize, though, is that lots of people underestimate the power of those residuals. The best thing you can do with this income is to use it as capital.

To be able to sell your business in the long-run, you need to make sure that you start the business the right way in the first place. There are some major things you're going to have to take into consideration so that your company is able to grow:

1) Own your portfolio's residuals. Maybe this seems very transparently obvious to you; after all, what's the point if you don't own your source of income? However, it's not uncommon that sales agents will lose their entire portfolio simply because they did not read the agreement that they made with their processor closely enough. You should always consider what might happen if you just decide to stop selling; if the answer is that you will lose your hard-earned residuals, then choose another partner.

2) Be able to sell your residuals. If you can't sell something, do you really own it, then? Sometimes processors will require you to have to consider an offer from them before selling to an outsider, and that's fine, but just make sure you are free to choose.

3) Find out if you can borrow cash against your residuals. A large ISO that isn't operating as a middle man should be able to lend you money. If they can't, this is a problem. Usually, you're going to want to exhaust several options before a buyout, and this includes borrowing.

So let's assume you have all of these issues squared away and are the proud owner of a growing portfolio of accounts. Now you can start to use that asset to raise some capital!

Before you do anything else, though, take a look at these general guidelines that will help you get a better picture of what is going on when the selling occurs:

Do you qualify? Don't bother trying to pump any cash from your portfolio before you have at least two dozen accounts or so. Make sure that your accounts are making at least $1000 every month as well. You will be hard pressed to find anyone who would want to buy residuals less than this.

Performing a buyout: When you perform an 100% upfront buyout, you'll get about 12 to 20 times the monthly worth of the accounts that you're selling. This is a rough estimate, but adjust your expectations accordingly.

Performing an earn-out: Basically, this is the same as a buyout, except you get less upfront. Some of the money is upfront, and the rest is sent to you in increments with the stipulation that your accounts don't get canceled and that they continue brining in a certain amount of money. This will yield you more than a buyout in the long run—about 20 to 24 times your monthly income.

Performing a secure buyout: Let's say you have a significantly-sized portfolio and you only want to sell some of your residuals. You can sell some of those accounts, and then use your others as collateral essentially to guarantee against any cancellations. This means less risk for the processor, so they are usually willing to pay more.

Getting a loan: Maybe you just need to borrow some liquid cash and use your residuals as a guarantee. Most ISOs can do this for you. Usually, you can borrow anywhere from a few months to up to a year's worth of residuals. The terms will vary depending on your m erchant services ISO program. Since of course your ISO will be interested in minimizing risk, just show that you are using the funds to grow, and you'll have a better chance at getting the deal you want. Your ISO will also usually offer better terms than outside lenders.

Did this article help you learn more about how to turn your portfolio into a machine that pumps out capital? Do you have a portfolio that you're looking to use right now for these sorts of purposes? Contact us and we'll show you the way.

Download PDF: Using Your Portfolio as a Source of Capital – Selling Your Processing Business 

Posted by: Scott Shaw AT 09:05 am | Permalink | Email

ISO Agent Partnership

Become a payment service provider today and take your business to the next level. If you are a sales-oriented individual with vast experience in the world of payment processing or you are a driven and motivated professional looking for a new challenge, the SMG ISO agent program might be a great fit for you. With the highest paying commission structure in the industry, superior products, and sales support, our program will see to it that you are rewarded for your efforts.

For anyone with a sales background or a passion for the payments industry, SMG is the ideal partnership. There are dozens of reasons to become a sales partner with Shaw Merchant Group, but don’t just take our word for it. Here are some of the top reasons that we were given when we asked our ISO agent participants why they chose us and why they continue to work with our highly lucrative program.

Sales Partner Portal

With our industry leading partner portal, you’ll have access to online enrollment, training sessions, marketing materials, and you’ll always be ahead of the game with the latest news and promotions.

Alerts

Stay up-to-date on merchant issues and their resolutions via automated emails and text messages that include a detailed ticket number describing what the merchant’s concern was and how it was resolved.

Registered DBA (White Label)

With our program, you’ll be able to market under your own brand, without paying costly fees! Your brand will be seen on the partner portal, marketing communications, merchant statements, and more.

Free Equipment for Your Merchants

Selling businesses on a new processing plan is much easier when you are able to effortlessly jump over the hurdle of the cost of the equipment. With this program, you can offer your clients free equipment that they will need for their processing provider change. This lowers the barrier to switching and creates a higher conversion rate for you.

Lifetime Passive Income

You will recieve 50–70% of residual income based on the pay structure you select. You will share income on every available revenue stream. With SMG, you get a True Interchange Revenue Split. Unlike other ISO agent programs, there is no basis points off the top for BIN sponsorship or for what they call hidden losses. Our sales partners earn more residual income with our 50/50 partner program than you would with our competition who claim to offer a higher percentage because thier interchange cost (buy rate) is higher.

$20K Performance Bonus

We offer a performance-based fast start bonus that is payable for anyone that onboards more than the standard threshold of clients in the first 4 months. This program is designed to reward those experienced sales members that join our team and quickly learn how to sell this product. The bonus can reach up to $20,000, making it one of the most lucrative and competitive in the industry.

Profitability Based Bonuses

We will look at how much profit is generated on the account after they have been processing for one month and you earn 14 times of the total profit. Example: If we retain $100 in residuals in that month, the bonus would be 14 x $100 or $1,400. You would have already been paid $600, so we would pay you an additional $800 on that account. This bonus is capped at a max of $10,000 per merchant per location. With our dual pricing program it is easier than ever to earn huge bonuses with a 14x profitability bonus. This dual pricing model enables you to maximize your bonus at $10,000 on almost every merchant processing over $90k.

Dual Pricing Program

When you are selling merchant services, one of the best assets of any partner program is more rewards and incentive programs that save your client money. The Edge dual pricing program is one of the hottest new commodities in credit card processing, as it is designed to save the client thousands of dollars in credit card processing cost, instead passing on the fee to the consumer in a way that isn’t damaging to their own conversion rate and revenue. We offer this program to our clients and make it easy to understand and present for our sales partners.

Medical Benefits

With some sales jobs, you don’t even have the option for medical coverage. With the SMG ISO agent program, you’ll have the resources that you need to provide healthcare coverage to you and your family at an affordable rate. We take care of our own, and when you are in our program you will have access to these benefits.

White Label ISO Program

Grow Your Merchant Services ISO with White-Label Payment Solutions

As an independent sales organization (ISO), you can upgrade your business by providing merchant processing services under your own brand. You may dismiss the idea at first, probably thinking that you don’t have the infrastructure or expertise to set up your own payment processing company. However, with white label payment processing, all you really need is a good ISO partner.

How a White Label ISO Program Works

To offer payment processing services under your own brand, your ISO partner will provide you with an online application page that doesn’t identify their company. This “white label” solution is ready for your brand and includes your logo, colors, and contact information, so your merchants only identify the payment solutions with your company. It eliminates any confusion among your merchant customers about who their service provider and primary contact should be. Your brand is the only thing the merchant will see on your website, merchant portal, and marketing materials.

Your payments ISO partner becomes a silent partner, providing technology, payments functionality, and services. This puts you in more control, allowing you to deliver seamless, consistent customer experiences in all interactions – and enhance your brand’s reputation. With this white label payment solution, you won’t need to overcome negative perceptions a prospect may have about the company your working with. This is because you are creating a unique customer experience. Better still, you don't have to fall in line with another company's existing customer experience.

Once you start providing white label payment services, you will also find that you build stronger, longer lasting relationships with your merchants. They'll begin to view you as a payments expert and an expert in the other solutions you provide. You may even find you are able to grow your customer base, as merchants in every vertical or niche can benefit from accepting payments, enabling you to market to more types of businesses.

Remember: white label payment processing enables you to earn huge residual income.

Our White Label Program Will Save You Thousands in Fees

Put your brand on merchant statements and applications — build your brand with your sub-agents and merchants. Full white label payment solution with your logo and branding on applications, statements, online enrollment, merchant and partner portals.

We at Shaw Merchant Group have an awesome white label solution. There is no huge package of documents for you to fill out, no approval process by Visa and Mastercard and the sponsor banks, and best of all no annual dues. Here are some details on the “White Label ISO” program:

Roughly 4–5 weeks to fully set up once we get the signed license document back.
Executed addendum from you saying it’s OK for us to use your brand too.
This program can run on our standard schedule A’s with bonus and free equipment and has no other obligations. from you other than the standard agent agreement.
When we set up the DBA you will have access to EPX/BMO Harris for submitting merchants under your brand.

What do we brand?

Paper Applications
Online Applications (Simplified Enrollment)
Partner.PaymentsHub for your back office.
PaymentsHub for your merchants — It’s generic when your merchant logs in and then show your brand once inside.
Merchant Support Email — TMS (ticket management system) which emails you and your merchant each time we speak with your merchant and shows the proper brand in the notice and as the from address on the email.
Merchant Support Phone — Our call centers answer with a generic “merchant services” then once they have the MID identified, they represent your brand.
Deployment Packages — Generic boxes and welcome docs inside with proper brand.

What we need:

A letter authorizing EPX to register your DBA on your company letterhead.
A high resolution image of your company logo.
A certificate of good standing from the state you are registered in. It may not be called a certificate of 'good standing' in some states.
The ISO Branding request form.