What is an Independent Sales Organization (ISO)?

Most businesses today need expert guidance to navigate the complex and ever-shifting payments landscape. Enter Independent Sales Organizations (ISOs): third-party entities authorized to connect merchants to acquiring banks and payment processors. 

By offering personalized service and customized products, ISOs make the complex world of payments more accessible — and ultimately help merchants build the infrastructure they need to grow their businesses effectively.

What is an ISO?

An ISO acts as an intermediary between merchants and the financial institutions responsible for processing electronic payments, such as banks and credit card companies. Specifically, they handle the daily operations of the merchant accounts that enable businesses to accept credit and debit card payments, and provide the infrastructure to process these transactions smoothly and securely. 

But ISOs are more than mere payment processors. Many also offer value-added services such as fraud protection, tailored payment solutions, and hands-on customer support. Registered with and regulated by major credit card companies like Visa and Mastercard, they maintain similar security standards to banks, but are often more flexible when it comes to the services they offer.

Who Can Become an ISO?

Becoming an ISO involves a rigorous approval process that includes registration with major credit card associations and sponsorship from a member bank. 

Not just anyone can become an ISO; individuals or companies must meet strict financial, operational, and security standards. If you opt to make your company an ISO, look for an experienced partner who can guide you through the steps and help avoid unforeseen complications.

How Do ISOs Fit Into the Payment Process?

To understand the role of ISOs, it’s important to look at how they interact with different entities in the payment ecosystem:

Credit Card Associations

Credit card associations like Visa and Mastercard govern the overall payment processing framework. They establish the rules for how transactions are conducted and set interchange fees that determine how much merchants are charged for each transaction.

Association Member Banks

These banks sponsor ISOs, allowing them to connect merchants with credit card networks. They bear financial responsibility for the transactions processed by the ISO.

Merchants

Merchants rely on ISOs to set up and manage their payment systems. ISOs offer tailored solutions to meet the specific needs of each business, whether it’s a small brick-and-mortar store or a large eCommerce platform.

Are ISOs and Merchant Service Providers (MSPs) the Same?

While the terms ISO and Merchant Service Provider (MSP) are often used interchangeably, there is a subtle distinction. 

Visa uses the term ISO, while Mastercard refers to similar entities as MSPs. Despite this difference in terminology, both types of organizations provide the same services: helping businesses manage payments processing.

Benefits of Working with an ISO

Most merchants choose between working with an ISO and going directly to a bank for their payment processing needs. However, there are a few reasons why partnering with a trusted ISO might be a better choice, especially for small- and medium-sized businesses (SMBs).

Versatility

ISOs generally offer a range of services that can be customized to fit the needs of different businesses. Whether a retailer needs a point-of-sale (POS) system or an eCommerce company requires a secure payment gateway, ISOs can tailor their offerings to suit the business’ operational model. By contrast, large banks tend to offer a less flexible menu of set options.

Tailored Offerings

By working with multiple banks and technology providers, ISOs can create unique payment solutions for businesses. This flexibility ensures that companies only pay for the services they need, avoiding the one-size-fits-all approach often offered by traditional financial institutions.

Better Support

Unlike large banks, which may have limited customer service options, ISOs usually provide more personalized and accessible support. This allows businesses to troubleshoot issues quickly and receive guidance tailored to their specific needs, fostering long-term relationships and improving overall operational efficiency.

What Types of Businesses Benefit From Working With an ISO?

A wide variety of businesses can benefit from the specialized services offered by ISOs. Here are some examples:

Retailers

Physical stores can benefit from ISOs by integrating advanced POS systems that streamline in-store payment processing and provide valuable analytics on customer transactions.

eCommerce

For online businesses, ISOs provide secure payment gateways that ensure seamless transactions across various digital platforms, including mobile and desktop.

Service Providers

Service providers can use ISOs to handle card payments efficiently, allowing for easy, secure billing and payment collection. In addition, service providers who work off site — like tradespeople or landscapers — can benefit from tailored mobile solutions that enable them to accept payments on the go.

Small- and Medium-Sized Businesses

ISOs are often more cost-effective and offer more personalized services than banks, making them an ideal choice for SMBs looking for affordable and reliable payment processing solutions.

How Priority Positions ISO Agents for Success

At Priority, we recognize the crucial role ISOs play in today’s digital payment landscape. We’re committed to growing your business for the long term, with hands-on support from experts on our team. Our comprehensive merchant services offerings empower your agents with the tools they need to deliver tailored solutions that delight your customers. 

Learn more about Priority’s ISO services or contact us today for more information.