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Insights and Expertise
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Breaking the 30-day an application fee for submitting the merchant. Residuals,
like the full moon, are paid monthly, typically, 20 days after
cycle: residuals the end of each month. This allows for the month to close,
the reports to be provided and the residual department
time to prepare and reconcile the residual. Unlike the full
reinvented moon, however, this cadence is arbitrary. It aligns with
monthly fees and allows for clean comparisons, but ride
share drivers, for example, could be paid monthly but are
paid much more frequently. This same opportunity exists
for sales professionals.

Daily residual calculations
It is now possible to use next-gen tech to calculate
residuals daily, reducing timelines by 97 percent and
allowing sales professionals to have daily visibility into
settlement profitability. Future options include providing
the discretion of when sales professionals wish to be paid
based on their merchants' activity, and as often as each
day via real time payment rails or push to card.

Such activity should assist with understanding the critical
By Kapil Pershad activation process as well as ensuring the merchant was
Payzli properly keyed and with the expected pricing. This daily
information can assist in ensuring sales representatives
ong ago when aspiring entrepreneurs sought to are properly pricing merchants and that information is
deploy electronic data capture (EDC) terminals accurately transferred to the processor.
at merchant locations, they leased the devices
L and placed the merchant with a nearby bank. Monitoring processing can also mitigate attrition and be
Historically, banks needed to be adjacent to their mer- used to understand a merchant's peak and slack days.
chants, as merchants needed to bring their receipts to the Instead of waiting until the latter half of the next month to
bank, which would key in the transaction receipts. validate profitability, it can now be done on the first day of
processing and every day thereafter.
EDC terminals allowed batches to be sent with the push
of a button and for merchants to be geographically Interchange and card network fee changes can be
disconnected from their banks. This new paradigm validated upon their implementation instead of after the
allowed non-bank entities to participate in merchant month has closed, providing additional utility. While real
servicing. The card networks created a new category for time payout of residuals is still in the works, it's more of a
independent sales organizations (ISOs), which made their financial exercise. The enhancements provide another tool
money by leasing terminals. This was their sole source of to better manage cash flow and data. Doing so will help in
income. building out sales and referral channels.

Early innovators Innovation in the residuals space has long been
Innovators like the late Charles "Chuck" Burtzloff, founder overlooked by legacy acquirers, and modern fintech has
of Cardservice International, and the late Joe Kaplan saw largely avoided the residuals concept as a whole due to
the opportunity to grow and incentivize a sales force profitability concerns and their unique direct to merchant
through residuals. Joe originally worked for CSI but left digital strategies. It is encouraging to see modernization
and joined Tim Lochner and started Superior Bankcard. finally taking place, and I am eager to see what the future
That created competition for sales professionals. When holds.
CSI initially offered residuals, it was a flat $2 per month With an endless passion for engineering and entrepreneurship, Kapil
per account. Pershad has been riding the dynamic waves of financial technol-
ogy and product development for over 27 years. After a success-
Other ISOs competed for sales professionals' business. ful consulting career driving technology for global payment brands,
Innovators like Jared Isaacman and United Bank Card he is on an exciting journey as the co-founder & CTO of Payzli, a
(now Shift4) began giving away terminals along with full cutting-edge payments fintech. Here, he leads the innovation engine
residuals, replicating the men’s razor industry where the building payment solutions that simplify life for business owners and
money was made on selling blades. Competitors replicated partners alike. Contact him by email at kapil@payzli.com; Instagram
UBC and some modified the program, so a bounty was paid at @kapil.pershad or www.instagram.com/kapil.pershad; LinkedIn at
for every new merchant placed – a significant deviation www.linkedin.com/in/kapilpershad; or by phone a 818-269-1084.
from the early days when sales professionals paid the ISO
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