How Does an Independent Sales Organization (ISO) Work?

An ISO is an organization or individual that is not a Visa or MasterCard member bank, but which is associated with such a bank. This association involves various activities such as acquiring or issuing functions, soliciting cardholders, arranging for terminal leases or purchases, and customer service among others.

Independent Sales Organizations are also known as Member Service Providers, or MSPs. These organizations basically act as intermediaries for companies that want to develop the capacity to accept credit cards, but whose business model does not include accepting chargeback risk, which they wish to outsource, along with other underwriting functions, to a processor.

ISOs and Small Business Owners

Small businesses can have a hard time opening merchant accounts if they do not have the sales volume to justify it. However, many small businesses could still benefit from accepting credit cards, especially if they operate online. This is where an ISO can comes in. The ISO can enroll the small business owner into a card processing service. Once the small business has access to a merchant account, the ISO will have a direct relationship with the payment processor, which is a company that processes all card payments and transactions.

To sum it up, an ISO will:

  • Advertise their services to small businesses.
  • Ensure their business customers have access to a credit card processing account.
  • Help businesses obtain credit card processing equipment.
  • Provide businesses with support regarding the account.

As part of their marketing efforts, ISOs may contract professional salespeople, who are also known as merchant-level salespeople. These agents may or may not work on a direct commission, which may or may not include monthly residual payments for accounts that have been created with the contracting ISO.

How to Register as an ISO

Establishing an ISO is not easy. The selection process is very rigorous, since the business model carries a lot of risk for merchant banks. A prospective ISO will be asked to provide two years’ worth of financial statements both for the business and for the person registering the application. On top of that, credit applications will be reviewed, and a detailed business plan is expected. There are also compliance requirements that must be met, various documentation that must be reviewed, and yearly fees to take into account.  There is also a significant annual fee that must be paid.

In conclusion, ISOs serve small vendors, and their business model revolves around aggressive, but calculated marketing and sales tactics. They are the perfect intermediary for a market that is rapidly growing, since more and more customers expect to be able to make their purchases using credit cards. With a potential market comprised of half of America’s 27 million small businesses, ISOs are probably here to stay.

For more information on ISOs or to sign up for a merchant account, please call (888) 924-2743 or go to

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