Deep Dive: The ISO
Part Two - The Essential Breakdown
We are sure you've taken a shot at understanding your merchant services agreement; you've likely come across the term "ISO" more than once. You may have even signed a contract from someone associated with an ISO, yet you probably weren't given a clear explanation of what it actually means.
At PayStream, being open and honest is key to building a strong relationship. Let's break it down and shed some light on what an ISO is, how it fits into the payment processing landscape, so that you can make informed decisions.
The Essential ISO Breakdown
ISO stands for Independent Sales Organization. It's a company that is:
Registered with Visa/Mastercard
Sponsored by an acquiring bank
Authorized to sell and support merchant accounts on behalf of processors like TSYS, Fiserv, and others
Think of an ISO like a dealership that resells the services of the big processors. They can offer merchants access to credit card processing accounts, payment gateways, hardware, and more.
Most business owners never deal directly with an ISO
Instead, they typically engage with agents or consultants who represent an ISO and operate under the ISOs sponsorship. An agent can be "captive", meaning they can only sell one ISO product, or an agent can be an “independent consultant”, like PayStream, and they can partner with multiple ISOs. In both cases, the business owner works directly with the agent who handles the selling, onboarding, and support of the ISOs processing product.
Captive vs. Independent
Because not all ISOs, or agents, are created equal, the distinction between "captive and "independent" is important and matters more than you might think.
Since captive agents are limited to selling the products of just one ISO, they may:
Push one-size-fits-all packages because they have sales quotas to meet, which could push you into something that doesn't suit your needs.
Lack flexibility in pricing since they don't have any other options to choose from.
Offer limited tech or integration options because their products are set, and they only represent one ISO.
On the other hand, independent consultants like PayStream can still offer the same products, but they have a different approach. They can:
Shop your business across several ISOs/processors since they aren't tied to just one ISO.
Customize your setup based on industry and volume because they can offer a variety of solutions.
Provide transparent breakdowns of fees and rates, as a single pricing structure does not bind them.
Act as a long-term partner, not just a salesperson, because you are their primary interest, not the ISO.
“It’s about finding the right partner in the vast landscape of options available.”
We Believe in the ISO Model: Our Thoughts
ISOs greatly enhance our independence; they have great value, although not without flaws. But we believe in them. Well-managed ISOs can offer businesses a wealth of benefits, like reliable processing platforms, fraud prevention tools, and insightful analytics. That's why we partner with top-notch ISOs that place a strong emphasis on transparency, compliance, and fair pricing. When these values are prioritized, everyone wins.
Choose Your ISO and its representing agent wisely.
The agent you choose, whether they are captive or independent, and the flexibility they have, can either save or cost your business thousands and thousands of dollars over time.
Final Thoughts
The ISO model isn't broken; it's just misunderstood. When leveraged correctly, it can provide your business with the flexibility and access to best-in-class tools, support, and savings.
PayStream was designed to work for you, not against you.
We've walked hundreds of business owners out of high-cost, low-transparency setups into streamlined solutions that save time and money.
If you're not sure what you're paying for, or who you're really working with it's the perfect time to talk to us.
Schedule a Free Audit and let us help you navigate the ISO maze with confidence.
FAQ
Q. Do I need to know which ISO I am using?
A. Not necessarily, but you should know if your rep is tied to just one ISO, meaning they are a captive agent. Ask them who their sponsor bank is and whether they work with multiple platforms.
Q. Is PayStream an ISO?
A. Not yet. Today, PayStream operates as in Independent Agent, partnering with several ISOs and processors. This lets us act in your best interest, not theirs.
Q. What happens if I want to switch ISOs or processors later?
A. If you're working with a captive agent, you might face penalties or disruptions. But with PayStream, we can often migrate your setup without overhauling your system because we maintain relationships with multiple platforms.
Q. What is the biggest red flag when dealing with an ISO agent of any kind?
A. If someone representing an ISO is trying to sell you hard, won't show you a clear breakdown of fees, tries to rush the contract, or avoids your questions about long-term costs. Red Flag.
Q. Can I negotiate with an ISO?
A. Yes, but only if your agent understands the backend costs and has the leverage to negotiate. This is much harder to do with captive agents. Being able to negotiate is one of PayStream’s most significant advantages.