“Residual income” from credit card processing refers to continuing passive income that you can receive after onboarding a new client as a payment processing or merchant services reseller. Typically, residual income takes the form of a small percentage of every transaction that your clients process through the independent sales organisation (ISO) you represent.
Residual income can be a great addition to your monthly income. It also motivates you to continue to provide excellent customer service to retain your clients. Knowing how to gain, maintain and grow your residual income as a reseller can make your career in credit card processing both satisfying and financially rewarding.
How Residual Income Works
Merchants who accept credit and debit cards pay payment processing fees on each transaction. This is typically somewhere between 1% and 3.5% of the sale, depending on the payment processor they use. This fee is divided into several sub-fees, including:
- Interchange fees to the bank that issued the payment card
- An assessment fee to the payment network (Visa, Mastercard etc.)
- A markup to the payment processing company, part of which goes to the credit card processing reseller if the company has a revenue-sharing agreement
As long as the clients that you sign up for payment processing continue to process transactions through that company, you will continue to receive income regardless of whether you continue to reach out to and sign up any additional clients.
How Much Are Residuals in the Payment Industry?
The portion of the payment processing fees you receive will depend on what you have negotiated with your company. This could be stated either as a percentage of each transaction or as a percentage of the merchant’s markup.
For instance, let’s say that you’ve been promised 0.5% of every transaction processed by the clients you signed up for merchant services, or have a 25% revenue share agreement and the ISO charges a markup of 2% per transaction for a given client.
- You would earn $250 per month from a business that processes $50,000 per month in credit card transactions.
- You would earn $2,500 per month or $30,000 per year in passive income if you signed up a total of 10 companies of this size—all without selling any new products or approaching any new customers.
If you continue to build your client portfolio, your residual income will continue to grow. Your potential income is only limited by the time you choose to spend recruiting new clients and the loyalty of your existing clients to the payment processor you represent.
How Else Can Credit Card Processing Resellers Make Money?
Besides receiving residuals from selling merchant services, there are other ways credit card processing resellers can make money. The amount each reseller earns passively will depend on several factors, including how many clients they have, the financial terms the credit card processing company offers and the opportunities they have to earn one-time bonuses.
For example, credit card processing resellers might be able to boost their income with any of the following bonuses:
- Upfront bonuses for newly signed contracts, activations and approvals
- Bonuses for selling accounts that don’t require hardware
- Bonuses for selling point-of-sale machines (including traditional POS and mPOS)
- Bonuses for selling special kinds of merchant accounts, such as high-risk merchant accounts
The available bonuses will depend on the ISO and what it offers. Ultimately, however, it’s best to focus on increasing your earnings through residual income and see any bonuses as bonuses. Only residual income will continue to be paid into your account consistently and without any further work required.
How to Boost Your Residual Income as a Credit Card Processing Services Reseller
Once you know how to sell credit card processing services, there are several ways to increase your passive income and achieve financial freedom through your work as a credit card processing reseller. As with most other careers, success comes through hard work, passion and an understanding of how to approach people.
The following tips can help you make a healthy residual income as a credit card processing reseller:
- Keep yourself educated on the payments industry and any changes affecting it. Credit card processing is an industry that is subject to constant changes, especially in terms of technology.
- Understand the ins and outs of the product you sell and how new technologies can help the company you are selling to. Can you explain exactly how a global payment gateway works, what a merchant account is, why merchant services are important and how a point-of-sale system can affect the growth of a small business? Being able to sell your product and being ready to respond to any questions your customers have will be key to gaining a potential client’s trust.
- Be a good listener as well as a good speaker. Nobody likes a hard sell; resellers need to be sympathetic to business owners’ concerns and respond to what they’re saying with empathy.
- Be willing to try new approaches to sales. Sales aren’t limited to turning up on someone’s doorstep these days. Resellers can approach new clients through digital marketing, networking, telephone or email sales. EuroCommerce claims that 91% of Europeans are internet users, underlining the importance of being able to reach out to potential customers using online methods like email and/or digital marketing.
A Career in Credit Card Processing Can Be Financially Rewarding
Working for a merchant service provider as a credit card processing reseller can be a rewarding career path. Many resellers enjoy the experience of reaping the rewards of the hard work they put in and seeing the amount of monthly residual income they earn increasing as they gain (and keep) more and more clients.
People who are interested in a credit card processing business should partner with a reputable company whose services they are passionate about selling. This passion, along with extensive knowledge of the industry, will potentially translate into sales and, with time, a growing passive income.
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