Both novice and seasoned sales agents for independent sales organizations can have difficulty understanding exactly where they earn their revenue because not every ISO defines and pays residuals in the same way, note observers.
Residuals are a portion of the transaction fee that represents revenue for the ISO and sales agent. Agents typically begin receiving residual income from an account after a merchant with which they have signed a contract begins processing card transactions.
“There is a big divide out there as far as sales reps who know what they are getting and the ones that don’t,” says Steve Eazell, director of national sales and marketing at Secure Payment Systems, a San Diego-based merchant-service provider. “Sales reps may not completely understand what the real revenue split is.”
Agents should pay close attention to the payment details included in their revenue splits, agrees Ryan O’Connor, president and CEO at Velocity Payments LLC, a Boulder, Colo.-based merchant-service provider. “I get agents all the time saying ‘So and so is offering a 80/20 split,’ and I say, ‘80% of what?’ he says.
Instead of a true revenue share, some ISOs may add on base fees and only share revenue with agents above those fees. “Agents sometimes overly focus on the percentage split without looking at the details,” says O’Connor.
Successful agents take the time to learn exactly how they earn revenue from an account, says Eazell, who suggests agents look closely at the merchant contract and their own contracts to better understand their revenue streams.
“You need to cover your own tracks and be responsible for anything you sign,” Eazell says. “It is very, very important that you recognize there is only one person responsible for how you get paid.”
If after examining the contracts certain aspects do not sit well with an agent, the sales rep should communicate the concerns to the ISO before signing anything, advises Eazell. “If you read your contract and find something out of whack, bring it to their attention. They have been pushed back on it before, I guarantee,” he says.
Ultimately, payment contracts are designed to “put money in the pocket of the person who wrote the contract,” which means agents need to negotiate to ensure they receive a fair deal, says Eazell.
