What is considered a fair revenue share on merchant services residuals?
There’s no hard and fast formula. But consider revenue share (or commonly referred to as split) a sliding scale that depends on these factors:
👉 The amount of training you need
👉 The amount of support the ISO provides to your merchants. A referral arrangement where you simply hand off leads will earn less than one where you provide ongoing service/support to merchants.
👉 The amount of liability the ISO is taking on your behalf. Low-risk/card present portfolios have higher revenue shares than high-risk ones.
👉 Your proximity to the processor. The closer you are to the party actually processing transactions, the more revenue share. If you’re an agent sending business to an ISO that sends it to another ISO, you’re getting a split of a split. There’s nothing wrong with this as they are likely providing support or resources not available to you closer to the processor. Just know where you stand and the parties involved.
👉 The number of freebies you receive. Getting free equipment? That’s fine, but understand it’s baked into the cost of your agreement.
👉 Access to proprietary software or technology.
⚖️ The arrangement where both parties feel it is a mutually beneficial arrangement with potential for growth.
📝 Check your existing agreements to be sure you’re earning revenue share on every item billed. This is a common margin buster for sales agents/offices.
When is it worthwhile for the merchant to respond to a chargeback? This is a tricky question, and to understand the right answer, it’s probably best for us to start with