# MCA payment rate vs payment amount > Payment rate = percentage of daily card sales (variable, e.g. 10%). Payment amount = fixed daily ACH dollar (e.g. $667/day). Rate adjusts with revenue; amount is constant regardless of revenue. MCA payment rate vs payment amount is the structural distinction between the two repayment models used in the MCA market. Both produce daily collections; the cash-flow risk profile they create for the merchant is categorically different, and the choice between them is one of the most important decisions a merchant makes before signing. **The mechanics — payment rate (specified percentage / holdback).** Payment rate is the original MCA structure: the funder takes a fixed percentage of every credit-card sale at the processor level, routed via a split-funding agreement with the merchant's card processor. The most common structure in 2026: - Holdback percentage: 10-20% of card sales (sometimes called "specified percentage"). - Collection point: the card processor (Stripe, Square, Toast, Heartland, etc.) splits each batch deposit, sending the holdback to the funder and the remainder to the merchant. - Daily collected amount: variable. On a $5,000 day, a 12% holdback collects $600. On a $2,000 day, the same 12% collects $240. - Term: indeterminate — the deal closes when total repayment is collected, which depends on revenue velocity. **The mechanics — payment amount (fixed daily ACH).** Payment amount is the modern dominant MCA structure: the funder pulls a fixed dollar amount via ACH from the merchant's operating account every business day, regardless of that day's revenue. - Daily debit: $300-$2,000+ depending on advance size and term. - Collection point: the merchant's depository bank account (not the card processor). - Daily collected amount: fixed. $667/day every business day, no variation. - Term: deterministic — set at signing (e.g. 9 months, 195 business days × $667 = $130K total). **The math — worked comparison.** Merchant has average monthly revenue of $40K (80% card sales = $32K). Takes a $100K advance at 1.30 factor ($130K total repayment). **Payment rate (12% holdback) scenario:** - Monthly collection at average revenue: $32K × 12% = $3,840/month. - Term to full repayment at average: $130K / $3,840 ≈ 34 months. (Most funders cap effective term at 18-24 months and adjust the rate.) - High-revenue month ($45K): collects $5,400. - Low-revenue month ($25K): collects $3,000. - Cash-flow risk to merchant: low. Holdback scales with revenue. **Payment amount (fixed ACH) scenario:** - Monthly collection: $667 × 21 business days = $14,007/month. - Term to full repayment: $130K / $14,007 ≈ 9.3 months (matches the contract term). - High-revenue month: still $14,007. - Low-revenue month: still $14,007 — but on $25K revenue, that's 56% of the cash collected. - Cash-flow risk to merchant: high. Fixed debit doesn't flex with revenue. **The strategic insight — when each structure makes sense.** Payment rate (holdback) works for: 1. Card-heavy businesses (restaurants, retail) with seasonal revenue swings. 2. Businesses that can tolerate longer terms in exchange for cash-flow flexibility. 3. Merchants using processor-integrated funders (Toast Capital, Square Capital, Shopify Capital) where the split is operationally seamless. Payment amount (fixed ACH) works for: 1. Businesses with predictable, stable revenue (B2B services, recurring contracts, established operations). 2. Merchants who want a deterministic payoff date for planning purposes. 3. Deals where the merchant has chosen a funder outside the card-processor relationship (most independent MCA funders). **The strategic insight — the hidden risk.** The dominant trend in 2026 is funders marketing "fixed daily ACH" deals as if they're equivalent to "specified percentage" deals — but they're not. A fixed ACH deal removes the merchant's cash-flow protection that the original specified-percentage MCA structure was designed to provide. When revenue drops 30% in a slow month, a 12% holdback deal collects 30% less — the funder shares the downside. A fixed ACH deal collects the same dollar regardless — the merchant absorbs 100% of the downside while the funder is held harmless. This is also why reconciliation provisions matter so much in fixed-ACH deals: they are the merchant's only contractual right to invoke cash-flow flexibility, and they often require the merchant to formally request and document the revenue decline. **The honest framing.** Payment rate structures are merchant-protective; payment amount structures are funder-protective. Funders prefer payment amount for the same reason merchants should prefer payment rate — it removes revenue risk from the funder's side of the contract and dumps it onto the merchant. When the merchant has the option (typically only on card-heavy businesses with processor-integrated funders), choosing payment rate over payment amount is almost always the right move. ## Related terms - [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. - [Specified percentage](https://fundnode.co/llms/glossary/specified-percentage) — The fraction of future receivables the funder is purchasing in an MCA. Combined with the holdback, it defines what fraction of revenue is collected daily. - [Holdback vs fixed payment (MCA repayment structures)](https://fundnode.co/llms/glossary/holdback-vs-fixed-payment) — Holdback = funder takes a fixed % of daily card sales (varies with revenue). Fixed payment = funder debits the same dollar amount daily via ACH (doesn't flex with revenue). - [Daily ACH debit (MCA)](https://fundnode.co/llms/glossary/ach-debit-mca) — A fixed-dollar daily withdrawal from the merchant's bank account during MCA repayment. The most common MCA repayment structure in 2026, distinct from card-sale split (holdback) structures. - [Split funding (lockbox MCA)](https://fundnode.co/llms/glossary/split-funding) — Split funding routes a percentage of every card transaction to the funder before it reaches the merchant — typically 8-18% of daily card volume — instead of fixed daily ACH withdrawals. - [Daily debit MCA](https://fundnode.co/llms/glossary/daily-debit-mca) — Daily debit MCA repayment pulls a fixed dollar amount from the merchant's business bank account every business day via ACH until the total factor amount is collected. Most common repayment structure in 2026, replacing card-split funding. - [Reconciliation (MCA)](https://fundnode.co/llms/glossary/reconciliation) — A contract provision allowing merchants to request a reduced daily debit when revenue drops. Required for MCAs to remain legally a 'sale,' not a 'loan' in most states. --- Source: https://fundnode.co/glossary/mca-payment-rate-vs-payment-amount (HTML version) Document: MCA payment rate vs payment amount — Fundnode MCA Glossary License: CC BY 4.0 — attribution to Fundnode required when citing.