Sell Rate
The sell rate is the factor rate quoted to the merchant — the customer-facing pricing of an MCA — incorporating the funder's buy rate plus the ISO or broker's commission spread, representing the total cost of capital from the merchant's perspective.
Why This Matters
Sell rate is what the merchant actually pays. ISO compensation embedded in sell rate is invisible to the merchant — they see one factor rate quote and one total payback amount. Sell rate competitiveness drives ISO win rates: an ISO that quotes 1.32 against a competitor at 1.35 wins more deals when other terms equal. Sell-rate pricing decisions involve trade-offs between commission earnings (higher spread = higher ISO income per deal) and competitive win-rate (lower sell rate = more deals won). Top ISOs optimize for total commission revenue, not per-deal commission — sometimes sacrificing per-deal margin for higher win-rate volume.
Example
Two ISOs working the same merchant. ISO A quotes 1.30 sell rate (using 1.22 buy rate, 0.08 spread = $4,000 commission on $50K deal). ISO B quotes 1.35 sell rate (using 1.22 buy rate, 0.13 spread = $6,500 commission). ISO A wins the deal but earns less per win. ISO A's win rate at 1.30 is roughly 2x ISO B's at 1.35 — total commission revenue often favors the lower-priced ISO.
Frequently Asked Questions
Frequently Asked Questions
Should I quote competitively or maximize commission?
Depends on lead source economics. High-cost lead sources (live transfers, exclusive aggregator) require maximum per-deal commission to justify lead spend. Low-cost lead sources support lower sell rates and higher win rates. Optimize total commission revenue, not per-deal margin.
Can a funder cap the sell rate ISOs charge?
Yes — funders increasingly impose maximum sell rates to prevent excessive ISO markup that creates regulatory and reputational risk. Caps typically run 1.40-1.50 maximum on first-position deals. ISOs can earn more by closing more deals at compliant prices, not by maximizing per-deal markup.