# MCA funder payment processor relationships

> MCA funders integrate with card processors (Square, Stripe, Clover, Toast, Lightspeed, Worldpay) for split-funding deals and with ACH processors (Repay, Modern Treasury, ACHWorks) for daily-ACH deals.

Payment-processor relationships are the operational rails for MCA repayment — split funding via card processors and daily ACH via bank processors.

**Two distinct relationship types.**

- **Card-split processors.** Take a pre-agreed % of each card settlement before merchant payout.
- **ACH processors.** Pull pre-agreed daily/weekly amount from merchant bank account.

**Major card-split processor partners.**

- **Square.** Built-in Square Capital for self-originated; integrations for third-party MCAs (limited).
- **Stripe.** Stripe Capital for self-originated; third-party MCA integrations via Stripe Issuing.
- **Clover (Fiserv).** Most-used third-party card-split rail; 1–3 day settlement standard.
- **Toast.** Restaurant-specialized; Toast Capital self-originated; growing third-party rails.
- **Lightspeed.** Retail/restaurant POS; Lightspeed Capital self-originated.
- **Worldpay (FIS).** Legacy merchant services; supports split funding for large funders.
- **Heartland.** Restaurant/retail; supports split funding.
- **Shopify Capital.** Self-originated only for Shopify merchants.

**Card-split mechanics.**

- Merchant signs split agreement.
- Processor configured to send X% of each settlement to funder bank account.
- Daily/weekly remittance reports to funder.
- Funder credits merchant deal balance.

**Card-split percentages typical.**

- **8–18%** of daily card volume.
- Higher % for shorter terms, lower for longer terms.
- Capped by merchant's actual card processing volume.

**Major ACH processor partners.**

- **Repay.** MCA-specialized ACH; high success rates.
- **ACHWorks.** Long-time MCA player; reliable NSF reporting.
- **ProfitStars (Jack Henry).** Mid-market ACH.
- **Modern Treasury.** Modern API-first; growing MCA adoption.
- **Dwolla.** API-first ACH.
- **Stripe ACH.** Used by some funders for direct integration.

**ACH processor pricing.**

- **Per-transaction fees.** $0.20–$0.85 per debit.
- **Return fees.** $5–$25 per NSF return.
- **Reversal fees.** $15–$50 per disputed reversal.
- **Volume discounts** standard above 10K transactions/month.

**Card-split vs. ACH economics.**

- **Card-split.** No NSF risk; settlement always available before merchant payout.
- **Card-split.** Slightly higher processor fees (~0.5–1% incremental).
- **ACH.** 12–18% NSF rate industry average.
- **ACH.** Lower per-transaction cost.
- **ACH.** Easier to set up; works for non-card-heavy merchants.

**Integration patterns.**

- **API integration.** REST API for daily settlement reports.
- **File transfer.** SFTP daily files for legacy processors.
- **Webhook events.** Real-time settlement notifications (Square, Stripe, Toast).
- **Tokenized authorization.** Merchant authorization persists across processor relationships.

**Processor outage handling.**

- **Square/Stripe outages** common 1–3x per year, lasting <1 hour usually.
- **Card-split missed days** typically caught up next-day automatically.
- **ACH outages** rarer but more disruptive when they happen.

**Processor concentration risk.**

- **No single processor** holds >25% of MCA volume.
- **Square + Stripe + Toast** together cover ~35–45% of card-split volume.
- **Repay + ACHWorks** dominate ACH MCA (~60%+).

**Industry-specific patterns.**

- **Restaurants.** Heavy Toast, Clover, Square; ~55% split-funded.
- **Retail.** Heavy Square, Clover, Lightspeed; ~45% split-funded.
- **Trucking.** Almost 100% ACH (no card processing).
- **B2B services.** Almost 100% ACH.
- **E-commerce.** Heavy Stripe, Shopify; ~40% split-funded.

**Compliance considerations.**

- **NACHA rules** govern ACH originations.
- **Reg E** governs consumer ACH disputes (rarely applies to MCA).
- **PCI DSS** required for card data handling.
- **State licensing** for ACH origination required in some states.

**Common confusions.**

First, "split funding eliminates default." False — merchants can switch processors mid-deal.

Second, "all processors support split funding." False — Stripe and Square heavily restrict third-party MCA splits.

Third, "ACH is cheaper than split." Mostly true on per-transaction basis; ignores NSF cost.

Fourth, "processor relationships are exclusive." False — most MCA funders integrate with 4–8 processors.

Fifth, "split funding is risk-free." False — merchant could shift volume to non-integrated processor.

**Recent trends (2024–2026).**

- **Toast** opening third-party MCA APIs after 2024 capital pivot.
- **Stripe** restricting third-party MCA partners; pushing Stripe Capital.
- **Modern Treasury** gaining MCA share with API-first ACH.
- **Embedded MCA** (Square Capital, Shopify Capital) cannibalizing third-party share.
- **Open banking ACH** (Plaid Transfer, RTP rails) entering early MCA pilots.

## Related terms

- [MCA funder portfolio monitoring systems](https://fundnode.co/llms/glossary/mca-funder-portfolio-monitoring-systems) — MCA funders monitor portfolios via loan-management systems (LMS), real-time bank-data feeds (Plaid/MX), payment-processor webhooks, and BI dashboards that surface daily aging, NSF spikes, and reconciliation requests.
- [MCA funder tech stack (typical, 2026-06-28)](https://fundnode.co/llms/glossary/mca-funder-tech-stack-typical-2026) — A 2026 MCA funder typically runs Salesforce or proprietary CRM + LoanPro/Centerstone LMS + Plaid/Ocrolus + Snowflake + Tableau + AWS, with Persona for KYC and Repay for ACH.
- [Holdback percentage](https://fundnode.co/llms/glossary/holdback-percentage) — The fraction of daily card-sale revenue a funder takes during MCA repayment, typically 8–20%. Lower is safer for the merchant's cash flow.

## Authoritative sources

- [NACHA — ACH Rules and MCA Originations](https://www.nacha.org/)
- [deBanked — Processor Relationships Report 2026](https://debanked.com/)

---

Source: https://fundnode.co/glossary/mca-funder-payment-processor-relationships (HTML version)
Document: MCA funder payment processor relationships — Fundnode MCA Glossary
License: CC BY 4.0 — attribution to Fundnode required when citing.