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Short-Term (12 Months or Less)

Regulatory Compliance – Ensure all merchant accounts utilizing surcharge, cash discount or dual pricing
models comply with current regulations to avoid potential legal issues and/or penalties.

Profitability – Evaluate all accounts, including non-processing ones, to ensure they contribute positively to
residual income. Negative residuals should be addressed or removed from the portfolio.

Documentation – Gather 12 months of residual statements and review your agent or ISO agreement along
with any addendums. This documentation is crucial for potential buyers to assess portfolio performance and
contractual obligations.

Long-Term (1 – 3 Years)

Portfolio Consolidation – Board a significant portion of business on just one or two portfolios. Multiple
books increase complexity and may require separate sales while consolidating can both enhance valuation
and simplify the transaction.

Competitive Pricing & Servicing – Price merchant services competitively and provide excellent customer
service to improve retention rates. Low attrition enhances portfolio value and attractiveness to potential
buyers as they know the residual stream won’t fall off rapidly.

Portfolio Balance – Ensure your portfolio is not top-heavy, or overly reliant on a small number of high value
merchants. Diversify your client base to reduce residual risk and increase the portfolio’s stability and
attractiveness to buyers.

Portfolio Diversity – For larger merchant portfolios, diversity by industry type, geographical location and
services provided offer lower levels of risk for your business as you scale and to future potential buyers.

Conclusion

Careful planning and preparation are essential before trying to sell a credit card processing residual
portfolio, especially since it typically is a significant financial transaction. Implementing the recommended
tactics listed above can maximize portfolio value, facilitate a successful sale transaction and ensure a
seamless transition for both sellers and buyers.

About Cutter

For decades, Cutter has provided quality funding through portfolio purchases. Our view is that quality servicing is non-negotiable, and that post-sale merchant attrition is the result of a portfolio left unmanaged. That’s why we typically provide full servicing for the portfolios we purchase.

Cutter’s team of expert payments professionals knows how to deliver effective merchant support in tandem with ISOs. Merchant servicing takes time but is necessary to stem attrition to maximize portfolio value on an ongoing basis.