What Every ISO Should Know About Deal Stacking

Deal stacking is one of the most misunderstood and risky aspects of merchant cash advance. For new ISOs, it might even seem like a smart way to get merchants more capital fast. But stacking, when a merchant takes on multiple MCAs at once or within a short period, can backfire quickly. If you're not careful, it can damage your relationship with funders, put the merchant in a financial hole, and reflect poorly on your judgment. Understanding what stacking is and how to manage it responsibly is a key part of growing as a trusted ISO.

The Risks of Over Stacking

When a merchant takes on more than one advance without properly managing repayment, it creates serious cash flow pressure. While some funders may be willing to fund second or even third positions, it all depends on the merchant’s health and repayment behavior. Too much stacking often leads to missed payments, defaults, or worse. Funders may even pull their offers entirely.

Here’s what overstacking can lead to if not handled properly:

• Higher default risk: Merchants juggling multiple repayments are more likely to miss payments or close their accounts.

• Reduced approval odds: Funders check for open positions. Seeing too many makes them hesitate or decline entirely.

• Merchant dissatisfaction: Business owners may not fully understand the repayment burden until it’s too late.

• Funder blacklist: Submitting too many stacked deals can lead funders to avoid your submissions in the future.

• Regulatory concerns: Over stacking in some states can cross legal lines, especially if it appears predatory.

• Lost commissions: A deal that defaults within a few weeks can result in clawbacks or full commission loss.

• Reputation damage: Other ISOs, funders, and even merchants may warn others about dealing with you.

Understanding these risks is not about avoiding all second or third positions. It is about knowing when they make sense and when they clearly do not.

‍

How to Spot and Manage Stacked Merchants

Not all stacked merchants are the same. Some are strategic, some are desperate, and some simply don’t understand what they’ve signed up for. Your job is to identify the difference before proceeding.

Here’s what to look for:

• Merchant awareness: Does the merchant understand their current repayment schedule and remaining balances?

• Fund usage: Did they use previous funding for business growth or just to repay another advance?

• Recent funding timeline: If the last deal was within the last 30 days, another may be too soon.

• Deposit volume: Can the merchant’s cash flow support another repayment?

• Daily repayment load: Add up existing repayments. Is there room for another without stress?

• Industry type: Some industries can manage stacking better than others, depending on margins and payment cycles.

• Funder rules: Some funders flatly deny stacked deals. Know who allows what before submitting.

• Merchant expectations: If the merchant expects to get funded no matter what, they may be shopping around or misleading ISOs.

Always communicate openly with the merchant. If the deal doesn’t make sense, explain why. Offer to revisit later if their financial picture improves. A short-term no can lead to long-term loyalty.

Deal stacking is a real part of the MCA world, but it requires careful handling. As an ISO, your credibility depends on sending clean, thoughtful submissions that benefit both merchant and funder. Understanding how to evaluate stacked deals and knowing when to walk away will protect your reputation and help you build long-term partnerships in the industry.