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 12x to 36x monthly residual depending on quality, attrition, and processor.
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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