Before I built this business, I needed to answer one question that nobody in the pitch was addressing directly.

What happens to this income when the economy breaks?

I've watched two serious cracks up close. 2008, when the financial system seized and colleagues who thought they had stable careers found out fast that nothing was guaranteed. And 2020, when a government shutdown policy decided overnight which businesses were essential and which weren't. I wasn't putting my family's financial future into a model that evaporated the moment the headlines turned.

So I did what I do when I need a real answer. I went to the data.

Here's what I found.

What Visa's Numbers Actually Showed in 2008

The 2008 financial crisis is the stress test that breaks most income models. Housing collapsed. Credit froze. Unemployment ran to 10 percent. Consumer spending dropped. Every business tied to economic expansion contracted.

Visa's payment processing volume declined less than 5 percent.

Not 30 percent. Not 50 percent. Less than 5. In the worst financial crisis since the Great Depression, across the full weight of reduced consumer spending, Visa's transaction volume barely moved.

Think about what that means for the infrastructure layer.

The agents and ISOs who placed merchant accounts in the years before 2008 kept collecting their residuals through the entire crisis. Not because the economy didn't suffer — it did. But because even in a contraction, people still buy things. They buy less. They buy cheaper. They trade down on brands and categories and ticket sizes. But they do not stop buying. And every transaction they complete — every card swipe, every digital payment, every checkout — flows through the same infrastructure and generates the same residual percentage for the agent who placed that merchant account.

Payment processing earns on volume, not margins. That distinction is everything.

Why "Earns on Volume, Not Margins" Matters in a Downturn

Most businesses earn on margins — the difference between what something costs to produce and what it sells for. When a recession compresses those margins, the income compresses with them. A restaurant earning 15 percent profit margins in a good year might earn 6 percent in a bad one. That's a 60 percent income reduction. The restaurant is still serving food. Still paying its lease. Still running the same operation. But the income is less than half.

Payment processing doesn't work that way.

When a merchant processes a transaction, the processor earns a percentage of the transaction value — not a percentage of the merchant's profit. A $200 car part sale at an auto shop generates the same processing residual whether the shop is running at 30 percent margins or 10 percent margins. The volume is the only variable that matters. And volume, unlike margins, is remarkably durable in economic downturns.

The McKinsey Global Payments Report tracks the global payments revenue pool annually. Through 2018 to 2023 — a period that included a global pandemic and one of the sharpest economic contractions in modern history — the payments revenue pool grew at 7 percent annually. Not despite economic disruption. Through it. The pool that includes the 2020 recession grew 7 percent on a compounded annual basis over that stretch.

That's not what a fragile income source looks like.

The 2020 Test

If 2008 showed that payment processing survives a financial crisis, 2020 showed something more interesting: it accelerates through a pandemic.

In-person card transaction volumes dipped during the sharpest lockdown months of Q2 2020. But digital payment volumes surged simultaneously as consumers shifted to online and contactless purchases. By Q3 2020 — within a single quarter — overall payment volumes had largely recovered. And by 2021, contactless and digital payment volumes were running at rates that would have taken years to reach organically.

The 2020 recession didn't slow payment processing. It reallocated it and then grew it.

The secular trend — cash declining, digital payments rising — continued straight through the downturn. It didn't pause because the economy contracted. It didn't pause because people were scared. Consumers who had never used contactless payments started using them in 2020 and didn't stop. Merchants who had never had online checkout got one and kept it.

The underlying behavioral shift toward digital payments is not economically cyclical. It runs independent of whether the economy is expanding or contracting. Recessions don't make people want to go back to cash.

The Crypto-Specific Layer: Recessions Make the Value Proposition Stronger

Here's what nobody in the broader payment processing conversation acknowledges about the crypto terminal model specifically.

In a recession, every basis point of processing fees matters more.

A merchant running 20 percent margins in a good economy and paying 2.9 percent in card processing fees is losing roughly 14.5 percent of its net margin to the processor. The same merchant running 10 percent margins in a recession is now losing 29 percent of its net margin to the same processing fee. The fee didn't change. The pain of it doubled.

This is the economic environment in which the conversation about switching to lower-cost processing becomes urgent rather than optional. Crypto payment terminals charge 0.5 to 1 percent. On a $1,000 transaction, that's $5 to $10 versus $29 to $35 for standard card processing. When a merchant is watching every dollar, that $20 to $25 difference per thousand in transaction volume isn't a nice-to-have. It's a real line item with real impact on whether the month ends in the black.

The same logic applies to chargebacks. Friendly fraud — customers disputing legitimate purchases — accounts for 75 to 79 percent of all chargebacks, and it increases when consumers are financially stressed. In 2023, chargebacks cost U.S. merchants $117.47 billion. For every dollar lost to fraud, merchants lose $4.61 in total when fees, labor, and lost goods are factored in. A merchant fighting for survival on compressed margins does not have $4.61 to absorb for every fraudulent dollar.

Crypto transactions are irreversible by design. Once confirmed on the blockchain, no bank or card network can unwind the payment. That feature is useful in good times. It's critical when consumers are financially stressed and dispute rates climb.

In a recession, the argument for crypto payment terminals doesn't weaken. It strengthens. The merchant who couldn't justify the conversation in a good economy recalculates quickly when their margins shrink and their chargeback rate rises.

What Recessions Do to Merchant Relationships

One more piece of the durability picture that matters.

Recessions don't cause merchants to switch payment processors. They cause merchants to cut everything that can be cut — staff, inventory, marketing, overhead. Payment processing infrastructure is not on that list, for one simple reason: switching creates downtime, and downtime costs revenue the merchant can't afford to lose.

The switching costs that protect residual income in good times are even more protective in bad times. A merchant with an installed terminal, trained staff, and integrated checkout doesn't pause operations to evaluate alternative processors when their margins are already under pressure. The account stays. The residual continues.

The industry data on merchant services churn reflects this. Standard annual voluntary churn runs 15 to 20 percent — and much of that is driven by businesses closing or changing ownership, not by merchants actively choosing to leave. Merchants who are staying open and processing transactions generally stay with their processor for years, recession or not.

The accounts placed before a downturn become more protected during one, not less.

What This Income Model Is Not

I want to be honest about the ceiling on this argument, because I'm not interested in making a case that falls apart under scrutiny.

Payment processing residual income is not immune to everything. If a merchant closes — genuinely closes, locked doors and no reopening — the account goes to zero. Business closures increase in recessions. An operator who placed terminals at ten restaurants in a dense urban market in early 2020 saw some of those locations close. That's real attrition, and it requires ongoing placement activity to replace.

The documented annual churn rate of 15 to 20 percent in merchant services accounts for this. A mature portfolio of 20 merchants loses three to four accounts per year under normal conditions. Under recession conditions, that number may be higher. The model accounts for it by keeping active placement in motion — not sprinting the way you do in year one, but maintaining enough new placement activity to offset attrition and grow the base.

A payment processing portfolio is not a Treasury bond. It carries operational risk. But the nature of that risk — moderate, manageable, distributed across multiple accounts rather than concentrated in one — is qualitatively different from the risk profile of most income sources Marcus is comparing it to.

A stock portfolio can lose 40 percent of its value in a quarter and there is nothing to do but wait. A real estate investment can go underwater when the property value drops below the mortgage and stay there for years. A salary can be eliminated in a single meeting.

A payment processing residual portfolio generating income from 20 separate merchant accounts loses accounts gradually, requires ongoing placement to replace them, and earns on the volume that continues flowing through every account that remains open. In 2008, that volume declined less than 5 percent at the largest payment network in the world.

That is a different risk profile. Not risk-free. Structurally different.

The Answer to the Question I Needed to Answer

When I looked at the data before building this, the recession question had a real answer.

Payment processing income didn't stop in 2008. It barely moved. It didn't stop in 2020. It reallocated and accelerated. And the crypto-specific version of this model has a built-in recession amplifier — the value proposition for lower fees and zero chargebacks gets stronger, not weaker, when the economy contracts and merchant margins get squeezed.

I needed to know the income I was building could survive the next time things got hard. The data said it could. My own observation of what happened to other income sources through 2008 and 2020 confirmed the contrast.

Gedam Tekle is a former U.S. Marine and Oakland Police Sergeant who left law enforcement to build crypto payment infrastructure businesses. He has personally exited two eight-figure companies and helped over 4,000 entrepreneurs build residual income. He is the founder of Dividend Shift.