Residual Income 101

residual income formula

Selling merchant accounts in the payment processing industry is no walk in the park. Welcome to residual income 101.

For starters, the digital payment industry is still very diverse and evolving quickly. Pair this with the fact that non-cash methods of payment now dominate purchases made globally, and high demand meets high levels of competition.

Not to mention rising concerns over issues of cybersecurity. Working in merchant services, you need to prove your reliability, functionality, adaptation, and secured connections — in addition to how you measure up against competitors.

Even with all of that said, there’s a reason why the payment processing industry continues to grow. The proven value of the opportunity is solidified with the potential of earning residual income.

What is Residual Income?

To understand residual income, let’s consider how merchant accounts work. These are sold to retailers as a means of settling debit and credit card purchases made by customers in-store, online, and so on.

Working with an Independent Sales Organization in managing a merchant account offers greater flexibility to retailers, which is why many choose to do so over working directly with banks. In exchange for the tools and services offered for managing merchant account transactions, retailers will pay ISOs both a monthly service fee and fees for every transaction made.

What this means for those in ISO sales is that they will receive a portion of fees charged to merchants every month. So not only are you making commission off of your portfolio, you’re also usually receiving checks monthly, quarterly, or yearly based on residual income calculations.

The more a merchant processes credit cards, the higher the earning potential for both the company and their sales agents. It’s a win-win situation for everyone.

How Do You Manage Residual Income?

With that being said, it’s only a win-win when residual income is paid out based on set expectations. Just as you expect your sales agents to bring on new merchants regularly, you also need to hold up your side of the bargain as the ISO employing them.

And sometimes it’s a double-edged sword because the more merchants your sales team brings on board, the more moving parts there are to manage as part of daily operations. It can be easy to let residual calculations fall through the cracks — leaving you with some very disgruntled employees as a result.

Thankfully, with a tool like IRIS CRM you can practically automate every aspect of residual income tracking, payment, and analytics. The dashboards we provide allow your backend operations team to assess metrics at both a portfolio and merchant level.

It literally takes minutes to calculate earnings across both the company and your agents with detailed overviews of income. And this accounts for managing residuals from any payment processor set up in the system. With your residual calculations finalized, you can then pay agents directly through ACH, which keeps everyone happy and motivated in helping your business grow.

If you’ve been struggling to keep up with residual calculations, partner with a tool that’ll help set things straight. Contact the IRIS CRM team for a free demo!

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