Merchant portfolios represent collections of businesses that are actively processing credit card payments. Each of these merchants generates monthly residual income for the organization that services their account.
Because these portfolios produce recurring revenue, they can be bought and sold as valuable business assets.
How Portfolios Are Valued
Most merchant portfolios are valued based on a multiple of their monthly residual income.
The industry standard often ranges between 30X and 45X monthly residual revenue, depending on factors such as merchant stability, industry type, and contract structure.
For example:
A portfolio producing $10,000 per month in residual income could potentially sell for $300,000 to $450,000.
Why Agents Sell Portfolios
Agents and ISOs may sell their portfolios for many reasons.
Some agents choose to exit the industry, while others sell portions of their portfolios to raise capital or reinvest in other business opportunities.
Why Buyers Acquire Portfolios
For buyers, purchasing a portfolio provides an immediate stream of recurring revenue.
Instead of waiting years to build a merchant base organically, acquiring a portfolio allows companies to expand quickly.
Portfolio acquisitions are a common strategy used by large ISOs and payment organizations to grow their operations.
