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How important is a High Residual Split – 5 Commission Traps that are Costing You Money – Part 2

This is one of the most common mistakes with new sales people in the credit card processing industry. They accept a compensation plan that is heavy on the front end and light on the residual. The standard argument for this decision is that you need to build a long term residual income stream, but that will not be my argument today.


This is one of the most common mistakes made by new sales people in the credit card processing industry. They accept a compensation plan that is heavy on the front end and light on the residual. The standard agrument for this decision is that you need to build a long term residual income stream, but that will not be my argument today.

#4 – High UpFront with Low Residual. Certainly the main reason to sell in this industry is the long term residual and I believe most new sales partners understand that. They do not choose a plan with no residual because they don’t see the value in residual income, they do so for 3 reasons.

  • New Sales Partners Don’t Understand the UpFront Potential. So many processors play games with the up front money or pay so little when offering residual income that the sales partner simply cannot afford to make it in the business.  Do your homework and find a processor that will pay you enough up front to build your residual.
  • New Sales Partners Don’t Understand Equipment Sales. If you are very new to the industry and you were recruited by a certain type of processor, you may be surprised to learn that even the newest and most advanced credit card terminals cost about $300 to purchase brand new. So, if your processor has you selling $89 per month leases for 48 months in order to pay you $500 up front, you are getting a rip off and so is your client, plain and simple. The processor is walking away with thousands of dollars every time you write a deal and your local reputation is about to hit an all time low as your clients find companies that offer free loaner terminals to every client.
  • New Sales Partners Don’t Understand Buyouts. Your residual income is worth real money. Your residual is a liquid asset. If you have a well balanced portfolio with $1,000 or more in monthly residual where the accounts have been processing for at least 3 months, you can usually sell that residual for at least 15 times its monthly value. So, before you give up your residual in exchange for an extra $100 up front, take the monthly residual and multiply it by 15 and realize that is how much you could get after 3 months of processing while keeping your up front compensation.
T ake a healthy up front bonus but keep a solid residual split in place so that you can at least sell the residual for more money 3 or 4 months down the road if you get into a tight spot.

Is Your Processor Playing Games with Your UpFront Bonus? – 5 Commission Traps Part 3

Read previous post:  Independent Sales Partners Are Not Robots

Independent Sales Partners Are Not Robots

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