# MCA funder merchant acquisition channels > MCA funders acquire merchants through five main channels in 2026: ISO/broker networks (55–70% of volume), direct digital marketing (15–25%), processor partnerships (5–15%), renewal/repeat (10–20%), and referral platforms (3–8%). Merchant acquisition channels are the routes by which MCA funders find and fund new borrowers. The channel mix determines a funder's cost structure, scalability, paper mix, and competitive moat. As of 2026-06-28, ISO networks still dominate but direct digital marketing and processor partnerships are growing share — driven by both the increasing sophistication of programmatic origination and the persistent challenges of managing ISO networks at scale. **The five primary channels.** **1. ISO and broker networks (55–70% of industry volume).** The traditional and largest channel. Independent sales organizations (ISOs) and brokers source merchants, run them through funder portals, and earn commissions (typically 8–15% of advance amount) on funded deals. - **Pros:** Scalable; ISOs do the merchant acquisition lift; access to merchants the funder couldn't reach directly. - **Cons:** High commission cost; quality varies wildly across ISOs; risk of stacking and double-dipping; ISO loyalty is to whoever pays the highest commission today. - **Top users:** Independent funders without strong direct brands — Credibly, Kapitus, Fora Financial, BFS Capital, hundreds of smaller funders. **2. Direct digital marketing (15–25%).** Search engine marketing (Google Ads), social media advertising, content marketing, and direct-to-merchant sales teams that source via inbound leads. - **Pros:** Lower commission costs (effectively replacing ISO commission with marketing CAC); direct merchant relationship; renewal and cross-sell potential. - **Cons:** Marketing CAC has risen materially (typical 2026 cost-per-funded-merchant via Google Ads: $1,500–$3,500); requires brand-building investment; competitive bidding. - **Top users:** OnDeck (now Enova Small Business), Bluevine, Fundbox, Lendio (aggregator model), Bankers Healthcare Group. **3. Processor partnerships (5–15%).** Payment processors (Square, Toast, Clover, Shopify Capital) offer financing to their existing merchant base based on processing volume data they already have. - **Pros:** Lowest customer acquisition cost in the industry (effectively zero — the merchant relationship already exists); strong data for underwriting; defaultable income source via direct processor capture. - **Cons:** Tied to the parent processor's merchant base; competitive pressure from outside MCAs. - **Top users:** Square Capital, Toast Capital, Stripe Capital, Shopify Capital, Clover Capital. PayPal Working Capital (now mostly wound down). **4. Renewal and repeat business (10–20%).** Existing merchants returning for additional capital after paying down a prior advance. - **Pros:** Lowest underwriting cost; highest conversion rates; lowest defaults (merchants who repaid once are more likely to repay again). - **Cons:** Requires existing portfolio; growth is capped by portfolio size and renewal rates. - **Industry standard renewal rate:** 30–50% of paid-off merchants take a second advance; ~60% of those take a third. **5. Referral and rate-shopping platforms (3–8%).** Fundnode-style platforms, Lendio's marketplace, Nav, Fundera, MCA rate-comparison sites that route merchants to funders. - **Pros:** Pre-qualified leads with merchant intent already established; transparent pricing reduces friction. - **Cons:** Growing competitive channel; can commodify the funder's brand; revenue share with the platform. - **Top users:** Smaller funders seeking growth without ISO infrastructure; large funders complementing other channels. **Channel economics — fully-loaded cost per funded merchant.** For a $50K average advance: - **ISO channel:** $5,000–$7,500 commission + $500 underwriting = $5,500–$8,000 total CAC. - **Direct digital:** $1,500–$3,500 marketing spend + $500 sales + $500 underwriting = $2,500–$4,500. - **Processor partnership:** ~$100 (programmatic offer triggered by processing data) + $300 underwriting = $400. - **Renewal:** ~$50 (automated offer to existing merchant) + $200 underwriting = $250. - **Platform referral:** $500–$1,500 referral fee + $500 underwriting = $1,000–$2,000. The CAC variance is enormous — and explains why processor-financing arms (Square, Toast) can offer significantly lower factor rates than ISO-channel funders. **Channel mix evolution (2020 → 2026).** ISO share has slowly declined as direct digital, processor, and platform channels expand: 2020 was ISO ~75% / Direct 10% / Processor 8% / Renewal 5% / Platform 2%; 2026 sits at ISO ~60% / Direct 18% / Processor 12% / Renewal 7% / Platform 3%. **Channel mix and paper grade correlation.** - **A/A+ paper:** Direct digital, processor partnerships, and renewals dominate. - **B paper:** Mixed — ISOs and direct equally represented. - **C/D paper:** ISO-dominated; the funders deepest in subprime paper are almost entirely ISO-sourced. This is because ISO networks reach merchants who haven't built relationships with banks or processors — typically newer, smaller, or thinner-credit businesses. **Channel-specific underwriting differences.** Funders treat the same merchant differently based on acquisition channel: - **ISO-sourced:** More skeptical; stacking and fraud screening more intensive; tighter LTV (loan-to-value). - **Direct:** Slightly relaxed because the funder has already validated the merchant's interest through their own marketing. - **Processor partnership:** Significantly relaxed because the funder has months of processing data showing real revenue. - **Renewal:** Most relaxed; existing payment history provides the strongest underwriting signal. **The channel-economics-to-pricing pass-through.** Funders with lower channel costs can offer: - Lower factor rates (Square Capital can quote 1.18–1.24 on profiles where ISO-channel funders quote 1.28–1.35). - Higher ISO commissions (paradoxically — direct-strong funders use ISO channels selectively and pay top commissions for specific paper). - Faster funding (lower processing cost = more automation). **Strategic channel-mix evolution by funder type.** - **Pure-ISO funders** (Kapitus, Fora, BFS): Highest channel cost, dependent on ISO relationships, most exposed to ISO disintermediation. - **Hybrid funders** (Credibly, CAN Capital, Forward Financing): ISO core with growing direct; building brand to reduce ISO dependence. - **Direct-first funders** (OnDeck/Enova, Bluevine): Strong direct channel, ISO as supplement; defensible economics. - **Processor-embedded funders** (Square, Toast, Shopify Capital): Lowest channel cost; embedded in payment infrastructure; structural moat. **Common confusions.** First, "ISO commissions are the same as direct marketing CAC." False — ISO commissions are 2–4x higher per funded merchant for most funders. Second, "Direct marketing is always cheaper." False — for B/C paper, direct marketing CAC can exceed ISO commission because conversion rates are low and bidding is competitive. Third, "All processor-financing is the same." False — Square, Toast, and Shopify Capital have very different economics and merchant targeting. **The 2026 takeaway.** Channel mix is destiny in MCA economics. Funders locked into ISO networks face permanent margin compression; those building direct, processor, or platform channels have structurally better economics. The next 3–5 years will see continued migration toward hybrid and direct-first structures. ## Related terms - [MCA funder ISO broker commission (typical, 2026)](https://fundnode.co/llms/glossary/mca-funder-iso-broker-commission-typical-2026) — Typical 2026 ISO commissions are 8–12% of advance amount on standard A/B paper, 12–16% on C paper, and 4–8% on renewal deals — often supplemented with $500–$2,000 marketing reimbursements and tiered volume bonuses. - [MCA funder marketing spend (typical)](https://fundnode.co/llms/glossary/mca-funder-marketing-spend-typical) — Typical 2026 MCA funder direct-marketing spend ranges from 1–4% of origination volume for ISO-dependent funders to 8–15% for direct-first funders; total customer-acquisition cost (CAC) for direct-funded merchants is $1,500–$3,500. - [MCA funder customer acquisition cost (typical)](https://fundnode.co/llms/glossary/mca-funder-customer-acquisition-cost-typical) — Typical MCA funder customer acquisition cost (CAC) in 2026 ranges from $200 (platform-native) to $6,000 (cold outbound), with the industry composite landing at $2,000–$3,500 per funded merchant blended across all channels. - [MCA funder merchant lifetime value (typical)](https://fundnode.co/llms/glossary/mca-funder-merchant-lifetime-value-typical) — Typical MCA funder merchant lifetime value (LTV) in 2026 ranges from $5,000 (one-and-done D-paper) to $40,000+ (renewing A-paper on platform), with industry composite landing at $8,000–$18,000 per merchant over a 3-year horizon. - [MCA funder marketing channel economics](https://fundnode.co/llms/glossary/mca-funder-marketing-channel-economics) — MCA funder marketing channels split into ISO/broker (60–75% of volume, $1,500–$4,500 effective CAC), direct-to-merchant digital ($800–$2,500 CAC), platform partnerships (lowest CAC at $200–$800), and outbound telemarketing (highest CAC at $3,000–$6,000). ## Authoritative sources - [Federal Reserve — Small Business Credit Survey 2026](https://www.fedsmallbusiness.org/) - [SMB Tech Outlook — Payment Processor Embedded Finance 2026](https://www.cbinsights.com/) --- Source: https://fundnode.co/glossary/mca-funder-merchant-acquisition-channels (HTML version) Document: MCA funder merchant acquisition channels — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.