When negotiating for regulatory coverage, what is a decent revenue share amount? Watch this video to learn more.
Hello, my name is Faisal Khan and I’m a banking and payment consultant. A question that often props up is if you are a service provider – if you’re a solution provider – who would like to get into an arrangement with a licensed provider, how much should that negotiation be.
Let’s say you want to start a money transfer business and you get in touch with a licensed provider, a bank or an existing money transfer license holder and
So what you need to understand is you have to make it worthwhile for them to make money in order for you to make money and get the coverage. On every million dollars process if they make 2000 to twenty five hundred dollars to three thousand dollars, that’s a decent number for them and that should be okay for you because in the retail space that you will be doing hopefully you will make 75 basis points one percent, one and a half percent, maximum probably 2 percent in the in the in the corridors you may be dealing with. So paying 35, 45 or 50 basis points is deemed okay. If you try to negotiate it any lower, you will risk alienating that relationship that you may have, you, the relationship may end. And it is very much encouraged that, you know, if the pricing is caught out between 30, 25 on a very large hole level, but 30 to 45 basis points, that is the sweet spot where you are just right and you should accept the deal. So if it’s anything higher I think it can come down depending on the corridors. The highest I’ve seen someone agree is about 75 basis points which was quite high to be very honest. 50 55 45 35 basis points is where the sweet spot is and if you get an offer from there I think you should take it.
I hope I was able to answer that question. If you have any more, feel free to ask in the comments section below, I’ll be happy to answer them. Till next time, take care.
This page was last updated on December 10, 2019.