Broker Commission (MCA Pricing)
Broker commission in MCA pricing is the percentage of funded amount paid to the originating broker or ISO — typically 5-15% — embedded in the difference between buy rate (funder cost) and sell rate (merchant rate), affecting overall MCA pricing economics.
Why This Matters
Broker commission economics shape MCA market pricing. Funders maintain buy rates (the rate at which they fund deals); brokers and ISOs sell to merchants at higher sell rates with commission embedded in the spread. A funder with 1.20 buy rate and broker selling at 1.30 sell rate produces 10-point spread split between broker commission (typically 5-10 points) and operational margin. This structure incentivizes brokers to extract maximum sell rates from merchants — a frequent source of merchant complaint when brokers prioritize commission over merchant interest. Direct funders with internal sales teams avoid commission economics by capturing the full buy-to-sell spread internally.
Frequently Asked Questions
Frequently Asked Questions
How much commission do MCA brokers earn?
Typically 5-15% of funded amount. Standard sub-ISO commissions: 7-12%. Master ISO commissions: 10-15%. Direct rep commissions: 5-10% (lower because direct reps are employees with base salaries rather than independent brokers). Commission scales with deal size, broker volume, and funder competitive positioning.
Does broker commission affect merchant pricing?
Yes — commission is embedded in the buy-to-sell spread, ultimately paid by the merchant through higher factor rates. Merchants working with multiple brokers typically receive varying offers because each broker prices commission differently. Going direct to funder may sometimes (not always) result in better merchant pricing by eliminating broker commission.