Hopefully this is no longer news, but Visa has decided to overhaul their risk reporting program, now termed VAMP, which we’ve written about previously.
While the program was soft launched in April of this year, enforcement started in October.
To shore up crappy books of business, banks have been buying low risk portfolios.
Why?
Because lower risk portfolios balance the VAMP metrics for a bank’s entire portfolio.
From Redbridge, a payments consultancy:
Visa’s enhancements to VAMP reflect a deeper focus on the transaction-level experience.
What Changed:
- VAMP now looks at all transactions, not just those with high-dollar fraud
- Acquirers are evaluated based on overall portfolio health, not isolated incidents
- The goal is to reduce consumer friction and systemic fraud exposure
With the ongoing enhancements with AI and real time payments, it just made sense that incremental improvements were no longer sufficient. Visa began to completely revamp the program altogether. It starts with prioritizing the end consumer friction that happens in their payment experience, regardless of the transaction amount. Visa decided to move the program from looking at the highest amounts of fraud that were happening and started looking at it from a transaction base approach. Now the acquirer can look at their entire portfolio and have a mix of high and low risk, and they will have the ability to manage their risk appetite without compromising the overall ecosystem.
Consequently we’ve seen some very high multiples for low risk portfolios lately.
We’re referring to this Reddit post since it 1) is relatively recent (2025) and 2) has numbers that most align with what we’ve seen.
To summarize what a conventional portfolio is worth:
- The size of the portfolio (both number of mids and residual amount), the age of the accounts and the attrition rate all matters here and will drive up or down the price.
- $5k-$10k a month portfolios (ie residuals) are often in the mid-20x monthly residuals.
- 30x-40x monthly residuals is common for larger portfolios.
- Earn out payments are also common. An additional payout 3x-6x can be added for Attrition under 10% after 12 months, and/or guarantees for new account production over the next 12 months to the acquirer
You know what we’ve been seeing for quality portfolios with very low risk?
100x monthly residuals.
That’s a massive premium.
It’s also harder to come by as the low risk verticals are being eaten by embedded payments from their software providers.
Also worth noting that so many of the legacy acquirers (Global, Shift4) are buying ISOs for high multiples when they themselves don’t trade for such multiples (kind of – keep reading).
Used to be you could arbitrage an ISO portfolio: buy it for X, then the market would value that revenue at 1.5X or 2X.
Look at Shaft4’s multiples.
Trading for ~2.2x annual revenues.
That’s 26x monthly residuals.
Global Payments is about 3.2x, or 38x monthly revenues.
The legacy acquirers can’t get any arb out of acquiring low risk portfolios: it’s simply a mechanism to keep their book running.
Now, if the portfolio is just EBITDA (and in payments support is an afterthought, so it should be nearly all EBITDA) then we can see per the above table that Shaft4 trades at 11x EBITDA.
That’s 132x monthly residuals for those who forgot grade school math.
At those numbers you can understand why acquirers would buy ISOs all day.
But still, 100x monthly residuals is 8.3x ARR, which is very solid in today’s public SaaS market, especially since the only way a payment portfolio’s NRR (net retention rate) creeps above 90% is with additional fees crammed through.
From AI: the median Annual Recurring Revenue (ARR) multiple for public SaaS companies fluctuates but generally sits in the 6x to 8x ARR range as of late 2024/2025, down significantly from 2020-2021 peaks (around 16x-18x) but showing signs of strengthening. Multiples vary widely, with faster-growing companies commanding higher multiples (10x+) and more mature ones around 5x-8x, driven by factors like growth rate, retention (NRR/GRR), and profitability.
If you haven’t figured out how to sell embedded payments – even to softwares that are locked down on their own payments – it would be a great time to exit a low risk portfolio.
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