Hi, my name is James Shepherd.
In this video, I’m going to talk to you about how much residual can you make selling
merchant services.
Now this is a really important question, one that I get asked all the time because in the
previous videos, we’ve been talking about up-front bonus money and sales and all that.
Of course, all that stuff is really important, but when it comes down to it of course, you
want to make residual.
That’s the whole reason people leave insurance and real estate and automotive to get into
merchant services because they want to build a big residual portfolio.
Today I want to talk to you about your residual split.
Before we dive into that again, if you’ve been following along with the previous four
videos, you know you got to go to instantquotetool.com.
You don’t need to sign in or sign up.
Just go to instantquotetool.com and click on goals.
If you click on goals, what that’s going to do is it’s going to take you to our income
calculator.
This income calculator is for any processor out there.
It just is a way to help you to figure out based on some core assumptions, how much money
are you going to make selling merchant services.
I want you to scroll down.
I’m going to walk you through real quick in case you missed the previous four videos,
definitely go back and either watch or listen to those episodes.
The sales per month year one we have at 12.
The sales per month year 2 we have at 7.
The sales per month year 3 and on we have at 5.
The average up-front bonus, we have $450 because we assumed that we are doing half leases,
half free terminals.
The gross margin we talked about in the last video, which is extremely important.
For this video, you need to understand the gross margin.
That one is at $70.
We talked about the gross margin in the last video.
Now we are going to talk about residual split.
There is one really important thing I left out of the last video that I’m going to
start this video with and that is your Schedule A cost.
In the last video, we talked about there is two important things in determining how profitable
an account is going to be.
The first one is what size account are you going after?
Is it a big account?
Is it a small account?
We didn’t talk about the second one.
The second one is what about your cost structure?
Your processor is giving you something called a Schedule A. One thing I think is just an
absolute must, if you haven’t done this yet, I think you are just crazy not to do
this.
We have here at our office at ccsalespro, we have a support team.
So if you email support@instantquotetool.com, send us your Schedule A from your processor,
whatever compensation details you want to have in there.
We will go in and we will load that in as a program for you in our instant quote tool.
Then you can run different scenarios, different size merchants, different types of merchants
and actually see what your projected residual per month is going to be.
I get a lot of people that are like, “Hey, I sell for two or three different companies.
How do I know which one to choose?”
Well, a big part of that decision should be what is your residual going to be.
You can compare apples to apples by loading them in.
Now just to be really clear.
At instantquotetool.com, we have a completely separate database.
Over there we are not using that data for anything.
That’s just your data.
You are just putting it in and so if your processor has authorized you to have the data,
you can input the data yourself, or you can ask our support team to help you input the
data.
Again, it is support@instantquotetool.com.
One thing I will tell you that is a huge red flag, if your processor is giving you grief
because “Well, we don’t want to share the Schedule A with you.
We don’t want you to know what your costs are.”
Why do you think that would be?
That’s obviously a big problem.
Right?
So make sure you have a good Schedule A. If you do, and you understand the last video
about profitability of the account, there is really only one variable left understanding
how much residual you can make selling merchant services and that is your residual split.
Again, if we go back to the calculator at instantquotetool.com and click on goals, we
have it set at 25% residual split.
That’s a very conservative number and that’s assuming that you are probably a sub agent
of another ISO.
You are getting a lot of support, a lot of leads, different things like that.
I would say an industry average right now is probably around 50%.
So I’m going to change that actually to 50%.
That is a 50% residual split.
Now the other industry averages I’m going to point out are going to be, don’t totally
focus on that.
If you have a processor that offers you 40% residual, but they are going to give you leads.
Maybe you are new to the industry and they are going to give you coaching, whatever it
is.
There are other things.
It’s not like you know, “Well, if it is less than 50%, forget that.”
No, if they are going to offer you 30 or 40% residual, but you are going to get a huge
opportunity to make a lot more sales; that’s great.
Also, some processors will offer more than that usually in exchange for no up-front bonus.
Some processors will offer you 70% or 80%, no up-front bonus.
The other thing to keep in mind is you want to be careful because some processors will
offer you a lot like an 80% split with an up-front bonus.
How are they paying for that?
Well, it’s the Schedule A. They’ve taken the cost up.
So you are getting a big piece of a smaller pie.
You need to understand your residual split.
Work with your processor.
Make sure you understand it.
For the purpose of this mini-series, we are going to put it at 50%.
Then we are going to move on to the last assumption and then I’m going to make one final video
to walk you through.
How do these different assumptions; how do they relate to your overall earnings and income?
We are going to talk about that here in the next video.