Residual Stream
The ongoing income an ISO or agent earns from each merchant they have boarded, paid as a percentage of processing margin.
Full definition
A residual stream is the recurring revenue an ISO, agent, or sales partner earns from each merchant account they have boarded onto a processor. Residuals continue as long as the merchant continues processing. In M&A, residual streams are sold either as full portfolio acquisitions or as carve-out transactions. Valuation multiples for residual streams typically range from 28x to 46x monthly residual depending on quality, attrition, and processor, with the strongest books at the top of that band.
Related terms
A third-party company authorized to sell or lease payment processing services on behalf of a sponsoring bank or processor.
The collection of merchant accounts a payments company processes for, valued for sale based on the income stream they generate.
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