Category: Stax Connect

For SaaS (Software as a Service) businesses that are looking for payment processors, there’s no shortage of options in the marketplace.

A simple payment gateway or eCommerce payment processor is relatively simple to set up and integrate with your website. But there are a lot of things that a standard payment processor doesn’t do.

As subscription-based businesses, SaaS companies have several unique needs when it comes to payment processing that regular eCommerce merchants do not. This is why SaaS businesses should do their research and select a payment processor that can meet these demands and optimize payment and billing management.

In this post, we’re going to cover the basics of SaaS payment processing and what to consider when choosing and implementing a SaaS payment solution for your business.

TL;DR

• A SaaS payment processor is a service provider that focuses on providing the tools that SaaS companies need to manage payments and subscriptions accurately.
• Using a SaaS-specific payment processing solution makes billing easier and more reliable.
• SaaS payment processing simplifies your recurring payments by offering a fully-customizable billing solution that automatically processes card payments at the intervals you’ve chosen.

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What Is SaaS Payment Processing?

First off, let’s define payment processing. A payment processor acts as a mediator between your business and your customer by managing transactions and ensuring that revenue is cleared and deposited in your merchant account.

Payment processors are often confused with payment gateways. However, they play different roles within the payment experience:

• The payment gateway approves or declines a transaction and transmits sensitive data to the payment processor.
• The payment processor relays this information to the issuing bank and the acquiring bank to move the necessary funds.

Every company accepting payments from customers requires a payment processor to manage this workflow. However, the business model used by SaaS companies requires a more specialized set of payment processing services than regular eCommerce merchants.

This includes recurring billing systems, subscription management, and supporting multiple pricing plans or tiers. In sum, a SaaS payment processor is a service provider that focuses on providing the tools that SaaS companies need to manage payments and subscriptions accurately.

What are the Benefits of SaaS Payment Processing? 

Here are the advantages of using a SaaS-specific payment processing solution. 

It makes SaaS billing easier and more reliable

Using a regular eCommerce payment processor may work for startup SaaS companies in the short-term. But as you gain subscribers and include additional pricing models, you need a solution that can scale alongside you and optimize your recurring billing model as your business grows. SaaS payment processors are tailored to these demands and are designed to evolve alongside your services.

It improves customer experience

Customer retention is the name of the game for a SaaS company to become profitable, yet almost 40% of consumers will ultimately cancel any subscription they subscribe to.

Once a subscription has begun, retention hinges on offering the best possible user experience. If a customer wants to upgrade their pricing plan or change their chosen payment option, it’s within your interest to make this process as seamless as possible.

A full-fledged SaaS payment solution will also offer a subscription management system that enables customers to easily update and change their plan, allowing you to offer frictionless subscription billing.

It simplifies accounting and reconciliation

Subscription-based companies like SaaS businesses face some of the most complex accounting rules due to the way their revenue is recognized.

Because a SaaS service cannot be redeemed all in one go (a 12-month subscription plan takes 12 months to be fully “used”), merchants need to defer this revenue until a point where the service can be considered finalized.

With the assistance of SaaS payment processing platform, you can reconcile your revenue automatically for thousands of subscriptions and eliminate manual processing.

It allows you to automate recurring billing easily

Manually invoicing your customers at regular intervals is a time-consuming exercise, especially chasing up late payments that can affect your cashflow.

SaaS payment processing simplifies your recurring payments by offering a fully-customizable billing solution that automatically processes card payments at the intervals you’ve chosen. This way, you no longer have to worry about missed payments or keeping track of changes that customers make to their subscription plans.

It integrates with your existing software infrastructure

Most SaaS payment processors offer an open API to allow for seamless integration with your website and existing business tools. This ensures that you can manage online payments efficiently and reduce the number of conversions you lose at the checkout due to necessary redirects or refreshes.

It helps protect your customer’s sensitive data

In order to set up recurring payments, customers have to provide card details for you to keep on file and charge on a recurring basis. But storing credit card information means a lot more liability for your business in the event of fraud or a data breach.

Choosing a SaaS payment processor that is fully PCI-compliant and offers security techniques such as payment tokenization ensures that customer data is kept as safe as possible.

Challenges of SaaS Payment Processing

While using a SaaS payment processor offers a wide range of benefits, there are a few limitations that SaaS businesses need to be aware of:

Limited payment methods

Because many SaaS payment solutions are focused on recurring billing and card on file functionalities, the number of payment options available is more limited. For example, most SaaS payment processors don’t support cryptocurrencies or Buy Now, Pay Later programs such as Afterpay.

While this gives your customers less flexibility, ACH, e-wallets, and debit/credit cards are the most-widely used options. One way to make up for this limitation is to choose a provider who can guarantee next-day or even same-day payouts of funds into your merchant account. This ensures that the payment methods you do have are fast and reliable.

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Difficulties with integration can make it hard to keep track of your subscriptions

It’s not unusual for businesses to operate more than one payment processor for different parts of their business. For example, you might have one system to manage recurring billing for a standalone subscription product, and another for subscriptions which offer multiple pricing plans.

But as your business grows, it’s difficult to get an overview of what is happening with different products—especially if your systems don’t integrate seamlessly.

Instead of wasting time managing multiple systems, be sure to choose a SaaS payment processor that can scale alongside your business and manage the entirety of the customer lifecycle. This avoids technical issues and keeps everything in one place for easier integration with your CRM system.

High churn rate

Subscription commerce is a highly competitive environment, and keeping hold of customers can feel like an impossible task. While signing up a customer can seem like a victory, they can easily downgrade or cancel their plan later, no matter how seamless the user experience is.

However, it’s worth bearing in mind that involuntary churn makes up between 20-40% of all customer churn at a business. For subscription-based companies, this number tends to be on the upper end. Why? Because recurring billing involves a higher risk of failed payments due to expired or canceled credit cards.

Make sure your SaaS payment solution offers advanced dunning management, including transaction retries and reminder notifications for customers to update their payment details.

High fees and transaction costs

One of the biggest drawbacks of SaaS payment processing is that pricing isn’t always transparent. Most solutions will charge a transaction fee of between 3-4% per transaction, though this can differ depending on the payment method.

While a provider might appear good value on the surface, there are a variety of extra costs and hidden fees that can catch you unawares. Some payment processors require setup fees, or charge extra for services such as chargebacks or processing foreign currencies. In practice, this means you can end up spending far more on SaaS payment processing than necessary.

Instead of navigating a long list of fees, consider choosing a payment provider (like Stax) that charges a fixed monthly fee for a set of services. This way, you always know exactly what you’re paying for.

What Should You Look For in a Payment Processor? 5 Tips to Consider

Not all SaaS payment processing providers are created equal. Here are some pointers to ensure you find the right one for you. 

Select a stable partner with a track record of success 

Partner with a SaaS payment processor who has a reliable record of positive testimonials. If there are any negative reviews, look for any patterns that could indicate recurring problems that aren’t being addressed. Most importantly, check to see whether the provider has replied and offered solutions; this is a sign of good customer service.

Make security a top priority

Make sure they’re PCI compliant. Compliance with the Payment Card Industry Data Security Standards (PCI DSS) is especially important for businesses that use recurring billing, as strict rules are placed on how customer payment data must be stored and encrypted to avoid data breaches. Choosing a PCI compliant payment solution ensures that your business has all the bases covered should the worst happen

Also, select a provider that offers fraud prevention measures and security safeguards. In addition to PCI compliance, there are a variety of other tools available to combat eCommerce payment fraud. Measures such as payment tokenization and chargeback management are important features in a prospective SaaS payment processor.

Find a provider that can scale with you

Choose a service provider that can grow with your company. Selecting a payment processor that can scale seamlessly alongside your business’s transaction volumes ensures that you won’t have the disruption of switching between systems, either due to transaction limits or growing fees.

Look at the solution’s customization capabilities 

The ability to adjust your transaction flow, billing options, and even brand your payment gateway are all valuable additions that help you to deliver a more seamless payment experience for your customers.

Best SaaS Payment Processing Solutions

Now that we’ve covered the fundamentals of SaaS payment processing, let’s look at the top players in the market. 

Stax Connect

Stax Connect is a full-fledged, subscription-based SaaS payment solution that offers scalable pricing plans and a full suite of subscription management capabilities, including recurring billing, stored payments, digital invoicing, and more. Thanks to its flat monthly fee, it’s easy for merchants using Stax Connect to keep track of payment processing costs and not worry about extra costs piling up.

Price: Plans start at $99 plus interchange fees

Pros:

• Full-fledged recurring billing system
• Easy to understand pricing

• Same-day payout capabilities
• Extensive data analytics

Cons:

• Support is limited to the United States
• Doesn’t support high-risk merchants

Stripe

Stripe is easily one of the go-to options for SaaS businesses looking for a global payment solution. Accepting a wide variety of payment methods and foreign currencies, Stripe is a great fit for merchants who are planning on expanding internationally and/or want to offer customers as much flexibility as possible.

Price:  2.9% + 0.30c per online transaction (no monthly fees)

Pros:

• A global payment network (accepts over 135 currencies)
• Straightforward pricing
• Accepts a wide variety of payment options

Cons:

• Requires a lot of developer experience to integrate properly
• Limited real-time reporting

Paypal

Easily one of the most recognized online payment options, Paypal is accepted nationwide and minimizes hassle for your customers. They offer both fixed and variable amount subscriptions, which covers the bases for most SaaS offerings. Their intuitive system makes Paypal easy to use, even for businesses that are new to ecommerce payment processing.

Price:   2.59% + $0.49 per card charge (no monthly fees)

Pros:

• Very easy to set up
• Well-known and trusted by consumers
• Available worldwide in 200+ countries

Cons:

• Limited protection against chargebacks
• Lots of hidden fees for recurring billing

Chargebee

Chargebee’s effective invoicing system makes it a great payment processor for businesses who are managing a large volume of subscriptions across several pricing plans. Discount management capabilities also make it easy to coordinate marketing and sales initiatives in response to customer churn metrics.

Price: $0 for the $100k of revenue, then $249 and up

Pros:

• Easy to set up multiple subscription plans
• Great UI experience
• Integrates with a variety of other systems

Cons:

• One of the more expensive options.
• Customer service is slow to resolve issues.
• Customization is complicated to implement.

Final Words

Effective payment processing and subscription management is the backbone of any successful SaaS business. If you cannot receive payments seamlessly or see how different subscription plans are performing, it will be a major challenge to reduce customer churn and remove lengthy, manual processes from your workflow.

Selecting a cost-effective, technology-led SaaS payment processor is the key to streamlining your Saas company and offering a superior payment experience. Set yourself apart from the competition by choosing a best-in-class payment processor like Stax Connect. Talk to us to learn more!

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Over the last decade, there has been significant growth in credit card and debit card transactions worldwide, with cash payments on the decline.

In 2021, 65% of Americans—that’s 168 million people—paid for their purchases using credit cards. While credit cards remained the most popular payment method for eCommerce transactions, debit cards found more popularity among shoppers in-store.

All this to say, modern-day merchants simply can’t afford not to accept card payments from their customers. And that’s where merchant services providers come in.

However, there are many different players and payment solutions in the world of credit card processing, which can often confuse small business owners. To make it a little easier, this article compares and breaks down the similarities and differences between two types of payment service providers (or PSPs): PayFacs and ISOs.

Let’s delve in.

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PayFacs Defined

Payment facilitators (or PayFacs) are a type of merchant service provider that enables businesses to accept electronic payments, both online and in-store. Think Stripe, PayPal, or Stax. They fall in between payment processors/acquiring banks and merchants, providing processing services on a sub-merchant basis.

How PayFacs work

A payment facilitator has a partnership with an acquiring bank. This bank supplies them with a master merchant account (MID), to which the PayFac can add their customers as sub-merchants (with their own sub-merchant IDs).

So, instead of applying for a unique merchant account directly with a payment processor or bank, a merchant applies with the PayFac. The merchant then goes through the PayFac’s underwriting process—a fairly quick one. Upon approval, the PayFac aggregates the merchant into a pool, so they can conduct business under the PayFac’s umbrella. 

The acquiring bank also takes on the liability for all transactions processed by the PayFac’s customers. The latter must, therefore, abide by some stringent rules laid down by the former.

There is also a processor involved in this payments ecosystem, whose job is to authorize transactions, route them to card networks, and settle funds from card-issuing banks to the acquiring bank. Sometimes, the acquirer and processor functions may be merged into what’s known as a sponsor bank.

When a sub-merchant accepts a payment from a customer, the processor moves the funds from the customer’s card-issuing bank to the PayFac’s acquiring bank. The payment facilitator will, in turn, move the funds to the merchant’s bank account. 

Functions of a PayFac

The payment facilitator provides customer support for sub-merchant payment processing. They also offer processing equipment such as POS systems, card terminals, and payment gateways. As far as merchants are concerned, they can bypass the payment processor completely and deal only with the PayFac. 

Since the PayFac effectively lends their MID to sub-merchants, they assume the responsibility of managing any disputes or chargebacks that may arise. They are also liable for 100% of the associated financial risks and losses that may come with processing these transactions. That’s why they must have robust controls in place to monitor their sub-merchant transactions consistently. 

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ISOs Defined

Independent sales organizations or ISOs are simply “resellers” of merchant accounts issued by acquiring banks or payment processors. They fall in between banks/payment processors and merchants—just like PayFacs—and some (not all) can take on an active role in facilitating payments.

How ISOs work

In the ISO business model, merchants don’t have to deal with the bank or payment processor directly. Instead, they would be dealing with the ISO, who would explain the terms and conditions to them, collect their information, and pass it on to the payment processor.

The processor will, in turn, sign them up as merchants on their platform and set them up with individual merchant accounts.

When a merchant accepts a payment from a customer, it’s the processor that authorizes and settles the transaction, and also deposits the funds to the merchant’s bank account.

Functions of an ISO

An ISO will explain the pricing, fees, and terms to the merchant and sign them up. They will also provide the necessary paperwork for the application and then pass on the information to the processor.

Some wholesale ISOs may share underwriting responsibility with the processor, but most ISOs do not undertake this task. In most cases, they offer customer support and arrange for the leasing/purchasing of payment processing equipment.

Independent sales organizations usually partner with multiple banks or payment processors so they can offer more flexibility to merchants and serve a larger customer base. They are typically not part of the contract between the payment processor and the merchant, but in some cases, they may be included as a third party. 

ISOs vs MSPs

The terms ISO and MSP are often used interchangeably, so you may wonder if there’s any distinction between the two. Both terms actually mean the same thing, although, Visa uses the term ISO, while Mastercard prefers to use MSP (or member service provider). 

PayFac vs ISO: Key Similarities

There are a few high-level similarities between PayFacs and ISOs, which is why they are often considered to be parallel channels in the payments ecosystem. Let’s take a closer look at some of these.

1. Both act as middlemen

Both ISOs and PayFacs act as intermediaries between their customers (merchants) and acquiring banks/payment processors, offering merchants a way to accept payments online and in-store. They can’t provide payment processing; they must partner with banks/payment processors for the same. 

2. Both simplify credit card processing

Most acquiring banks are reluctant to work with high-risk merchants and often work directly only with large businesses. Small businesses, therefore, find it quite difficult to get merchant accounts directly from banks.

Both ISOs and PayFacs make payment processing more accessible for small and high-risk businesses by acting as intermediaries. By working with a PayFac or ISO, merchants don’t need to approach banks directly to process payments. They’re also assured of better customer support should they run into any difficulties. 

3. Both PayFacs and ISOs charge commission

ISOs and PayFacs both get a commission from every transaction that a merchant processes. Commission can be taken per transaction run by the merchant, or paid in a lump sum/subscription-style fee.

PayFac vs ISO: Key Differences

Even though PayFacs and ISOs may seem to be quite similar on the surface, there are a few key differences between them. Merchants need to understand these differences, so they can decide which of these options may be better suited for their business.

1. Onboarding process

Depending on whether you work with an ISO or a PayFac, the merchant onboarding process will look quite different. 

Since an ISO is simply a reseller of merchant accounts, it typically takes a hands-off approach as far as onboarding is concerned. It passes on merchant information to the payment processor, and it’s the latter’s responsibility to do due diligence before approving their application and onboarding them. This process can take anywhere from a few days to a few weeks.

On the other hand, in the payment facilitator model, the PayFac manages merchant applications as well as the onboarding process on their own, including underwriting. It’s worth noting that some PayFacs (like Stripe, PayPal, or Square) do not perform underwriting at the time of the application, so approvals are almost instantaneous.

However, this means that you may be in for unpleasant surprises down the road. If they come across any red flags during underwriting, your merchant account could be suspended or terminated with little to no warning. So, make sure you choose a PSP that performs underwriting at the time of application.

2. Technology used

ISOs typically don’t need to invest a lot in technology or payment infrastructure as they mostly depend on the processor’s technology. However, since PayFacs perform activities like application, underwriting, and onboarding, they will likely need to build their own in-house apps and systems to accomplish all that.  

3. Settlement and funding

ISOs actually never handle a merchant’s money. Transactions are managed entirely by the payment processor including authorization, authentication, and settlement. Further, the processor is in charge of depositing the money to the receiving merchant account.

In contrast, the payment processor deposits the collective funds of all sub-merchants into the PayFac’s master merchant account. The PayFac, in turn, distributes them to their sub-merchants, so payment processing is often faster. 

4. Risk management

In the ISO model, the payment processor assumes all the risks associated with processing merchant transactions, including losses from chargebacks, fraud, or merchants going out of business. ISOs, therefore, have no risk management procedures in place.

In contrast, payment facilitators may be liable for 100% of the risk associated with sub-merchant processing as they take on a more active role in the payment process. So, they need to have stringent controls in place to consistently monitor transactions. It’s also their job to ensure PCI compliance.

5. Contracts

In the ISO model, merchants enter into contracts directly with the payment processor. The ISO may sometimes be included as a third party, but not necessarily. 

In the PayFac model, contracts are always drawn between merchants and the PayFac. They may have the payment processor as a party, but this is not a necessary requirement. 

PayFac vs ISO: Which Is Better for Your Business?

Both payment facilitators and independent sales organizations simplify credit card processing and may be great options for small businesses to work with. However, when it comes to choosing one over the other, you’ll need to consider your unique business needs.

ISOs typically work with multiple payment processors and can set you up with the most lucrative rates. However, getting approved for a traditional merchant account requires you to do a fair amount of due diligence to establish your business’s credibility. If your business is quite new or has very low sales volumes, getting a traditional merchant account could prove to be challenging. 

On the other hand, PayFacs may be willing to accept that risk and can get you up and running fairly quickly. However, they would typically offset the risk through higher processing fees and stricter account limitations.

The Stax Advantage

Stax is both an ISO and a PayFac —but with a difference. Our underwriting is done upfront, so you’ll never have any unpleasant surprises later on. Stax’s all-in-one platform helps you build your payments toolkit easily without having to work with multiple vendors.

Plus, our transparent membership-based pricing ensures that you pay a monthly fee in exchange for the direct costs of interchange—regardless of how much you process. That too, without any contracts, hidden fees, or markups.

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If you take a lot of ACH payments, then leveraging an ACH API can streamline your processes and ensure you’re able to take payments in an efficient and secure manner.

In this article, we will look at the role of ACH API, how it works, and how you can implement it for your company.

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What Is an ACH API?

To best understand what an ACH API is, you first need to grasp the basics of how ACH payments work.

ACH (Automated Clearing House) transactions are electronic money transfers from one bank to another processed through the ACH network. The customer must give the originating bank or financial institution authorization to debit or credit their savings or checking account.

The way a typical ACH transfer works is as follows:

• You will initiate the transaction as the originator by sending a Nacha formatted data file containing information about the desired payment to your bank which is called the ODFI (Originating Depository Financial Institution).
• Your bank (the ODFI) will collect all the transaction files you sent and forward them to an ACH operator. The files include information about the transaction type (credit or debit), routing numbers, and bank account details.
• The operator will send the files to the recipient’s bank, which is called the RDFI (Receiving Depository Financial Institution).
• The transaction is completed when the bank pulls the funds from your customer’s bank account.
• You will know if the RDFI has pulled the funds when you receive your payment.

You will need to repeat the process outlined above for each transaction.

This manual process of initiating transfers and handling each return code is further complicated by the need to comply with applicable rules and procedures. Utilizing the network requires adhering to strict security and data requirements.

Where ACH APIs come into play

The role of ACH API is to automate your transactions through the ACH network. According to Stax’s Lead Software Engineer Austin Kelsch, an ACH API is a “subset of the broader payment API category” and is used mainly to facilitate ACH transfers.

Your developers will use the ACH API to write software that will connect your business to the network and eliminate the need for manual payment requests. Initiating, receiving, and tracking payments at scale will become a breeze—freeing up time for sales and client management.

API integration will also save you money on credit and debit card transactions. By integrating your payment portals with banks, you will keep transaction fees lower and ensure money is quickly deposited into accounts after verification.

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How Does an ACH API work?

ACH APIs make transactions smoother and more cost-effective by integrating your business and payment processing systems.

In the same way that a credit card API  connects the merchant’s eCommerce site with its payment processor, an ACH API can connect a company’s system to the ACH network to facilitate transactions and eliminate manual work.

Let’s say you manage 50 residential properties and you need to collect rent from tenants each month using ACH. Each month, you would need to log into your bank portal and initiate 50 debit payments to your tenant’s bank accounts. You will also need to manually handle ACH returns or rejections due to issues like incorrect account information, closed accounts, or insufficient funds. Doing all these manually at such a scale is not a feasible long-term solution.

With API integration, your bank and platform can talk to each other and transfer data without you being involved. Think of the ACH API as a list of commands you can use to order a program to accomplish a certain task at certain intervals.

You can use the API to write code to initiate 500 debit payments on the 1st of every month with a given set of accounts.

In a nutshell, the ACH API includes all the protocols and routines you need to automate all kinds of online payments. Your developers can integrate the ACH API code into your business app and website. You can also add layers of security to meet the specific needs of your business.

The features of the API integration include:

• Bank account verification
• Processing of transaction fees
• Accepting ACH payments
• Microdeposits
• Multiple payment options
• Fraud monitoring
• Identity authorization
• Tokenization
• Consumer credit checks
• Recurring payments
• Automated receipts

What Are Some of the Use Cases of ACH?

The ACH platform is versatile enough to be used to facilitate a wide variety of transactions. Its most common use cases in business include:

Accepting payments

You can use the ACH network to facilitate customer payments for various goods and services. To accept ACH payments from your customers, they must authorize the transaction to your payment gateway, business bank, and the vendor that processes your payments.

A good example are pro service providers that allow their clients to pay via ACH for large amounts.

Recurring payments

These are payments that must be made on a set day of every month. If you collect recurring payments from customers, you need to get them to authorize ACH direct debits before automating the process with API. This will ensure payments are hassle-free for as long as they remain a customer.

Payment churn is one thing you need to consider when setting up recurring payments. Payment churn can be due to inconsistent payments, cancellation of your service, or a canceled credit card. Luckily, ACH has a much lower rate of payment churn than other payment types because it is linked to the customer’s bank account.

Businesses that need to pay recurring bills can also use ACH API to set up automatic payments that are made from a bank account or credit card on a regular billing circle. This is beneficial for both the person paying the bills and the party receiving the funds. The party being billed will be less likely to miss payments or make errors when authorizing payments, while the other party will be sure of a reliable source of payment.

In general, scenarios where you may need to set up recurring payments, include:

• Bill payments
• Memberships
• Subscriptions
• SaaS products

Paying employees

As a US-based employer, you can use ACH direct deposit to push money to your employees’ bank accounts at designated pay periods. Your employees will need to give their authorization and provide their account information and routing number.

Using ACH to settle employee payroll reduces administrative overhead because payments are made in large batches as opposed to writing individual checks for each employee.

Paying taxes

This payment option allows you to either use tax preparation software or file through a tax preparer to pay taxes using an ACH debit. The IRS will pull the money from your business account and you will see an “IRS USA Tax Payment” line on your bank statement as proof of payment.

Using the IRS electronic funds withdrawal option is free and it is way more convenient than mailing a check.

Paying a supplier

Using ACH to pay your suppliers will help reduce the potential for fraud and waiting time for checks to arrive by mail. Sending payments electronically is simply way more secure and convenient than making payments by paper check.

Implementing ACH APIs in Your Business

Before you integrate an ACH API into your platform, you need to be aware of the fact that ACH APIs are best suited for businesses that process large volumes of transactions.

API integration might not be necessary for smaller businesses. This is because custom code requires extensive management. Your team will need to manage error handling, reconciliation, access control, and transaction logging. Your connection is also highly dependent on you keeping abreast of any changes your bank may make to their API.

Essentially, connecting with a bank API is an ambitious undertaking that is only worthwhile when you need to automate manual mass payment processes as payment volumes grow.

That being said, if you’re ready to implement ACH payments through an API, the first step is to find the right solution provider. Here are the top factors to consider at this stage.

ACH API features

Be sure to look into the features that a payment provider offers,  Stax’s Lead Software Engineer Austin Kelsch. For obvious reasons, if you’re looking to implement ACH payments, then your providers must have ACH capabilities.

Beyond that, it’s worth looking at a solution’s broader capabilities. Austin recommends asking questions like:

• Do the features line up with the product you’re trying to build?
• Does the provider offer different types of payment methods you may need?

Ease of integration

Looking at a solution’s documentation is another essential step when selecting an API provider, says Austin.

“It’s a critical piece of the vetting process of an API. If a solution doesn’t have documentation, that’s a red flag. And then if it does, it should be thorough, and ideally, it includes examples and clear instructions.”

Cost

Be sure to evaluate the costs of the solution. Providers often have different fee structures. Some may take a cut out of each transaction, while others may charge a flat fee. Run the numbers in your business and ensure you understand your average payment volumes and transaction values. In doing so, you can figure out the most cost-effective solution for your business.

Conclusion

This article has shown you all you need to know about the role and benefits of ACH APIs and how you can integrate them into your payment processing platform.

If you’re ready to implement ACH payments through our API, get in touch with the Stax Connect team to kickstart the process of automating your ACH transactions. Contact us to learn more.

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FAQs about ACH API

Q: What is an ACH API?

An ACH (Automated Clearing House) API is a subset of payment APIs that facilitate and automate transactions through the ACH network. It helps businesses handle high-volume money transfers from one bank to another in a secure and efficient way.

Q: How does an ACH API work?

The ACH API works by reducing the need for manual payment requests amid transactions running through the ACH network. It integrates your business and payment processing systems and allows these systems to communicate and transfer data to facilitate transactions without manual intervention.

Q: What are the main elements of a typical ACH transfer?

In a typical ACH transfer, you initiate the transaction by sending a Nacha formatted data file to your bank (ODFI). The ODFI collects these files and sends them to an ACH operator. This operator forwards the files to the recipient’s bank (RDFI). Once the RDFI has pulled the funds from the customer’s bank account, you will receive your payment.

Q: What are some features included in API integration?

API integration includes several features like bank account verification, processing transaction fees, accepting ACH payments, micro-deposited, allowing multiple payment options, conducting consumer credit checks, authorizing identity, tokenization, setting up recurring payments, and generating automated receipts.

Q: What are the advantages of integrating ACH API into my business?

The integration of ACH API in your business can significantly make your transactions smoother and more cost-effective, especially for mass payments. It eliminates the need for manual payment requests, saving you time and resources. Additionally, it can reduce transaction fees and ensure quick money deposits post-verification.

Q: How are ACH APIs utilized in different business scenarios?

ACH APIs are instrumental for businesses that handle large volumes of transactions. They are used in various contexts, such as accepting customer payments, setting up recurring payments, paying employees, paying taxes, or paying suppliers. Using ACH APIs for these scenarios can reap benefits like automation, reduction of administrative overhead, reduced cases of fraud, improved security, and convenience.

Q: What considerations should I take into account when implementing ACH API into my business?

When opting for ACH API in your business, you need to evaluate the API features, the ease of integration, and the cost of the solution. Remember to study the solution’s documentation thoroughly and compare it with the requirements of your business. You must assess your average transaction values and volumes to choose the most cost-effective solution.

Q: What businesses are best suited for ACH APIs?

ACH APIs are best suited for businesses that process large volumes of transactions. This is because it builds a direct connection with your bank’s API, allowing automation of manual mass payment processes, which is beneficial as payment volumes grow.

Q: Can ACH API be used for B2B transactions?

Yes. Using ACH API for paying your suppliers can significantly reduce the potential for fraud and eliminate waiting time for checks to arrive by mail, making B2B interactions more secure and convenient.

Q: Can ACH API handle employee payroll?

Yes. Employers can use ACH direct deposit to push money into their employees’ bank accounts during designated pay periods, allowing for easier management of large batch payments and reduced administrative overhead.

Here at Stax, we talk about integrated payment solutions quite a bit, and for good reason: it’s great for businesses, SaaS companies, ISVs, and end-users.

When payments are tightly connected, websites, businesses, and software providers are able to provide a payment experience that’s much more secure and streamlined. Integrated payments can also serve as an additional revenue stream, so businesses see a higher bottom line.

But what exactly does this look like in action?

To help you better understand the ins and outs of integrated payment solutions, here are some real-life examples of companies offering them.

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Integrated Payments Examples: 3 Companies to Watch

We can go on about the beauty of integrated payment solutions, but we think the best way to relay its value is to show you companies that are actually using them.

BigTime

About the company: BigTime is a  platform that helps professional service firms track and manage their projects. The solution offers robust capabilities, including time and expense tracking, project management, reporting, billing, and payments. A solution used by customers in various industries (i.e., accounting, legal, marketing, and more), BigTime’s suite of tools helps teams large and small stay on top of all their projects.

How integrated payment solutions come into play: One of the most impressive things about BigTime’s platform is it doesn’t stop with project management. The solution also helps firms move business along even after project milestones have been completed. How? By offering billing and payment features.

BigTime has built-in invoicing capabilities, allowing users to generate invoices right from the app. What’s more, the platform has a feature called Wallet, which allows BigTime users to accept and process credit cards and ACH payments.

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BigTime effectively serves as a comprehensive project platform for pro services, so users can get all their needs met from one solution.

Learn how Big Time uses Stax Connect as a solution for enabling their customers to collect payments in a more efficient and safer manner.

ProfitSolv / Mango Practice Management

About the company: ProfitSolv is a billing, payments, and software solutions provider for legal, accounting, and pro services. The company has developed a number of practice management applications to help legal and accounting firms run their practices.

One of those solutions is Mango Practice Management a one-stop-shop solution that helps accountants with file sharing, time tracking, project management, document management, billing, and more.

How integrated payment solutions come into play: Mango offers integrated payments as part of its billing capabilities. The company markets this on its website by showcasing some of the feature’s top benefits, including the ability to accept ACH, eChecks, and credit card payments online.

Mango also lets users implement surcharging, so they can pass processing fees to clients and lower their payment costs.

CHIROSPRING

About the company: CHIROSPRING is a solution designed to help chiropractors do it all. The software digitizes appointment scheduling, payment intake forms, billing, and SOAP notes, so chiropractors can streamline their practices.

How integrated payment solutions come into play: CHIROSPRING Pay is the company’s integrated payments offering, and it lets chiropractors enhance their workflows by enabling them to get paid right from the software itself (i.e., no external browser).

With CHIROSPRING Pay, chiropractors can also store cards on file, implement recurring billing, and accept multiple modes of payment—ultimately making life easier for the clinic staff and patients alike.

How to Offer Integrated Payments

Now that you’ve seen what integrated payment solutions looks like in action, you may be wondering how you can offer similar services to your users. Here are tips to help you do just that.

Select the Right Payment Processor

The first step in becoming an integrated payment solutions company is to find a payments partner that offers the right billing and payment processing capabilities. Take Stax Connect, which has everything SaaS companies need to offer integrated payments.

Stax Connect supports multiple payment types including:

• credit and debit cards
• invoicing
• SMS payments
• mobile payments
• online payments

Stax Connect also has surcharging capabilities, which you can offer to users who want to lower their payment processing fees.

What’s more, Stax Connect has an existing relationship with the world’s leading sponsor bank, which means you can benefit from the stability of being backed by a solid financial institution.

Establish an Effective Payment Enrollment Process

Another key decision that comes with offering integrated payment processing is setting up your payment enrollment method. Payment enrollment refers to the process of getting your users onboard your payment solution. In other words, it’s all about how users can sign up for payments, so they can start using your platform to get paid.

Stax Connect gives SaaS companies three payment enrollment options.

1. Full API enrollment

You can choose the full API route, which lets you offer a payment experience that’s 100% on brand. With full API enrollment, your users can sign up for payments from inside your application, making the process smooth and seamless.

Just bear in mind that a full API enrollment does require API knowledge and substantial developer resources. You will need a team of coders who can build this enrollment process into your software through the Stax API.

2. Hybrid API enrollment

With the hybrid API method, your users can begin the enrollment process inside your software, then proceed to a co-branded landing page on their browser, where they can complete their application. This enrolment method utilizes the Stax Signup Application using Single Sign On (SSO) capabilities to securely direct users from your software to the web-based application form.

While you may have to do a bit of coding, the hybrid API enrollment requires significantly less developer resources than a full API approach.

3. White-glove enrollment

The white-glove enrollment option requires zero development work because you’ll be personally helping users sign up for payments. Instead of giving people a self-service application, the white-glove enrollment method involves someone from your team to facilitate the enrollment process on behalf of your users.

See Documentation: Enrollment: Stax API

Start Selling Payments

Already have a payments partner and enrollment method in place? Then you’re ready to market and sell payments!

Kick things off by promoting your payment offerings on your website. Similar to the examples we showcased above, you can create a dedicated section on your site to talk up your payment capabilities.

It also helps to encourage your sales team to promote integrated payments to both new and existing users. Educate your staff about the benefits of integrated payment systems (i.e., a better experience, lower fees, etc.), and instruct them to relay those value propositions to users.

Ready to Become an Integrated Payment Solutions Company?

If you’re a SaaS company helping users run their businesses, offering integrated payment solutions can take your platform to new heights. By giving people the ability to accept payments and streamline the customer experience, you’ll be able to attract more users and drive faster growth.

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FAQs about Integrated Payment Solutions

Q: What are Integrated Payment Solutions?

Integrated payment solutions involve connecting the crucial payment processing function with other important business systems and software. They can potentially increase the security and efficiency of transactions by enabling businesses to accept payments directly within their existing software.

Q: How do Integrated Payment Solutions benefit businesses?

Integrated payment solutions offer numerous advantages for businesses, including:

Improved security and streamlined payment experiences.

Serving as an additional revenue source, thereby increasing the business’ bottom line.

Reduction of human errors as payments are directly processed within the existing software.

Automated payment acceptance in various forms like credit and debit cards, invoicing, SMS, and online payments.

Q: Can you provide examples of companies using Integrated Payment Solutions?

Certainly, here are some examples of companies benefiting from integrated payments:

BigTime, a professional service management platform, includes billing and payment features with built-in invoicing capabilities and the option to process credit cards and ACH payments.

ProfitSolv/Mango Practice Management, offers integrated payments with its billing capabilities, accepting ACH, eChecks, online credit card payments, and implementing optional surcharging.

CHIROSPRING, a solution for chiropractic practices, offers an integrated payment service named CHIROSPRING Pay, that allows for payment directly through the software, facilitating stored cards on file, recurring billing, and multiple modes of payment.

Q: How can a business become an Integrated Payment Solutions Provider?

Businesses aiming to become integrated payment solutions providers need to:

Choose a payment partner that provides a comprehensive range of payment processing capabilities.

Establish a smooth payment enrollment process to onboard users to the payment platform.

Market and sell their payment offerings effectively by utilizing their website for promotion and engaging sales teams to communicate the benefits of integrated payments to potential customers.

Q: What is the role of Stax Connect in providing Integrated Payment Solutions?

Stax Connect serves as a comprehensive payment processor supporting multiple payment types like credit/debit cards, invoicing, SMS, and online payments. Stax Connect also has surcharging capabilities, enabling businesses to lower their payment processing costs. By creating a seamless payment enrollment process in partnership with Stax Connect, businesses can implement efficient and secure integrated payment solutions.

Most SaaS companies would agree that payment monetization is good for business. Offering payments—and getting people to use your services—encourages users to utilize your software more frequently. This enables them to get more value out of your product, which ultimately reduces churn.

Plus, payments add a new revenue stream for your company, resulting in a stronger bottom line.

That being said, the best way to increase payments-related activity and revenue is to get your users (i.e., merchants) to actually process payments through your platform.

To help you accomplish that, we’ve put together 6 tips to upsell payments to your users. Have a look below and see which ones are applicable to your business.

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Talk Up Your Payments and Billing Capabilities on Your Website

Users won’t sign up for your payment offerings if they don’t know they exist in the first place. That’s why you need to ensure you’ve set up marketing and advertising assets that can inform your current and existing software users about your payment services.

Not only will this educate them about what you have to offer, but it will also make it easier for your team to upsell payments. Having the right assets gives them collateral to share with users and move them towards the path to purchase.

BigTime, a provider of time tracking and expense software, does an excellent job here. In addition to mentioning payments on its homepage, BigTime has a section on its website dedicated to its payment processing product called Wallet.

This page has everything people need to know about BigTime Wallet—including how it works, the key benefits, and social proof from other users.

Train and Encourage Your Sales Team to Upsell Payments

Your sales team will likely be doing a lot of the legwork to get merchants sold on payments. As such, you need to make sure they have the support and resources they need to succeed. Consider the following tips.

Give your team some talking points

Educate your sales staff on the features and benefits of payments, and provide them with talking points to bring up when interfacing with software users to effectively upsell payments.

ProfitSolv, a company that provides billing, payments, and software solutions for professional services, does this well. Jason Goldfinger, the company’s VP of sales, says that ProfitSolv’s salespeople are trained to create value and get to know each user’s process.

“You build value by asking questions and digging into their current processes,” he says.

Examples of those questions are:

• “Tell me how you guys get paid today” and
• “OK, walk me through the process of how that works.”

From there, the salesperson would help the user see the inefficiencies with their payment systems, which then paves the way for a productive conversation.

For example, if a company is manually entering payment information into its system through an unintegrated processor, ProfitSolv’s team could direct the conversation to its payment initiatives.

That could look something like this:

Salesperson: How many payments do you do per month?

User: Probably around 50

Salesperson: Ok, you’re doing this manual process 50 times per month? (said with a concerned/surprised tone).

This, says Jason, sets the stage for the sales rep to show the value of integrated payments—ultimately helping to increase conversions. Make sure your team knows your competitors

It may also help to teach them about the competitive landscape so they know how your solution measures up against similar providers. This allows them to improve their sales pitch. Competitor battle cards with side-by-side comparisons would be a good tool here.

Incentivize sales

Finally, try to come up with incentives or programs that would further encourage your staff to sell or upsell payments. Reward your best salespeople and recognize the individuals for the deals they’ve closed.

It’s also beneficial to make your sales targets more visible. Having a dashboard indicating how much has been sold and how close the team is to their monthly targets may keep payments top of mind so your sales staff can actively sell and upsell payments services.

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Be Targeted with Your Upsells

If you’re looking to upsell payments to your existing users, strive to be more targeted with your efforts. Go through your SaaS payment metrics and userbase to identify accounts that would benefit most from your payment offerings. These could be customers that are using certain features, businesses of a certain size, or those that deal with high credit card volumes.

Whatever the case, figure out your “best fit” users for payments and prioritize them in your sales efforts. For best results and to upsell payments, tailor your pitch to each user. Have your sales team utilize their history and data so they can customize their customer interactions.

Let’s say you’ve noticed businesses that deal with more than $10,000 in credit card transactions would be a great fit for your payment services. You can use that info to generate a list of users to contact, and then personalize the pitch based on their account activity.

You could say something along the lines of:

“We’ve noticed that your invoiced amounts have hit $10,000 last month. Congratulations on your growth! Given your history, we think you’d be a great fit for our payment services. Here’s why…”

Starting a conversation that’s centered around the users’s needs and activities will make your spiel much more relevant, ultimately improving the chances of conversion.

Bring Up Payments at the Right Time and Place

When it comes to sales, timing and location matter a great deal. When and where you bring up the payments conversation can make or break your sales. This is why it’s important to pay attention to your typical user journey and identify the points at which to encourage them to use payments.

Let’s suppose you’re selling a client management solution that allows users to keep track of their client engagements and projects. Your software comes with billing and payments capabilities and you’d like to get more of your customers using those features.

With that in mind, you should introduce payments when it makes the most sense for your users. This could be when they already added clients and projects to the software and are ready to bill them.

In this situation, you could prompt people to use your billing and payments services when they’re about to conclude a project.

Consider displaying a software prompt or message that says something like:

“You’ve just marked this project as complete. Have you tried our billing features? XYZ Software makes it easy for you to manage your clients and get paid all in one place.”

By using this approach, your payment features will come up at just the right time, thus piquing user interest. It’s worth emphasizing the fact that using digital or integrated payments would help your users get paid faster.  Highlighting these things will not only improve the likelihood that they’ll explore your payment options, it’ll open up more opportunities for you to re-invest in your business.

Showcase Your Success Stories

Do you have existing users that are benefiting from your payment services? Make it a point to spotlight their stories. Produce case studies that outline the problems you’ve helped them solve and the results they’ve seen from using your payment services.

Once you have those case studies, put them up on your website and get your sales team to share them with prospects. Customer success stories are yet another excellent resource that your staff can leverage to market and sell your payment offerings.

Remember that social proof goes a long way. When potential users see businesses like them using your services, they’re more likely to sign up—or at least have a conversation with your team.

BigTime really shines in this aspect. The company’s feature page for BigTime Wallet contains a number of testimonials from users benefiting from the product. BigTime even produced a compelling video showcasing customer quotes.

Offer Promotions to Users Who Get On Board

Sometimes, you may need to sweeten the deal to get users on board your payment offerings. If it makes sense for your business, offer a discount on your software subscriptions if users process payments through your platform.

Take a look at what CHIROSPRING, a chiropractic software provider, is doing. According to Brian Albery, CEO of CHIROSPRING, the company recently launched a campaign designed to encourage users to implement integrated payments.

The campaign included an offer of a $200 credit to the user’s account when they sign up for payment processing.

To promote this, CHIROSPRING launched an email sequence that:

• Highlighted the promotion
• Communicated the benefits of integrated payments
• Promoted a sense of urgency by giving people a deadline for signing up

Consider doing something similar in your business. Just remember to analyze how your payments revenue translates to MRR or ARR. This will help you determine what sort of discount to offer.

Pro tip: A quality processing partner will assist the ISV in this analysis.

Need More Help Upselling Payments to Your Software Users?

If you’re struggling to upsell payments (even with the tips above), reach out to your payment processing provider. The right partner can help you fine-tune your payment sales efforts to ensure that your team can effectively sell and upsell your offerings.

At Stax Connect, we strive to have a mutually beneficial relationship with all our SaaS partners. We work closely with each partner and empower them to develop powerful strategies for increasing payment adoption.

Get in touch with us to learn how we help SaaS companies and ISVs with their payment monetization efforts.

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FAQs about SaaS Payments

Q: What is the importance of payment monetization in SaaS companies?

Payment monetization escalates the use of software and allows users to derive more value from the product, which in return lowers churn. Besides, it opens a new revenue stream, thus strengthening the company’s bottom line.

Q: How can I increase payments-related activity and revenue on my platform?

It’s crucial to convince users (merchants) to process payments through your platform; you can achieve this by upselling your payment services.

Q: What are some effective tips to upsell payment services to users?

Some key strategies include promoting your payments and billing capabilities on your website, training your sales team to upsell payments, targeting your upselling efforts, introducing payments at an appropriate time, showcasing your success stories, and offering promotions to users who sign up.

Q: Why is it essential to promote payments and billing capabilities on my website?

Users need to be aware of your payment offerings in order to sign up. Marketing and advertising assets on your webpage will help educate your current and prospective users about your payment services, making it easier to upsell these services.

Q: How can I train my sales team to upsell payments effectively?

Equip your sales team with talking points on the features and benefits of payments. Also, familiarizing them with the competitive landscape and incentivizing their sales efforts will enhance their ability to sell or upsell payments.

Q: Why is targeting upsells important?

Studying your SaaS payment metrics and user base to identify accounts that could benefit from your payment offerings, then tailoring your pitch to those users, will make your pitch more relevant and increase the chances of conversion.

Q: How can I bring up the topic of payments at the right time and place?

You should consider the typical user’s journey and identify points where encouraging them to use payments makes the most sense. This could greatly impact your sales results.

Q: What is the significance of showcasing success stories?

Showcasing success stories functions as social proof. When potential users see businesses like them benefitting from your services, they’re more likely to sign up or at least have a conversation with your team.

Q: What kind of promotions can I offer to encourage users to sign up for my payment services?

You could offer discounts on your software subscriptions if users process payments through your platform. However, it’s necessary to analyze how your payment revenue translates to MRR or ARR before deciding what sort of discount to offer.

Q: What can I do if I’m struggling to upsell payments to my software users?

If you’re finding it challenging to upsell payments, you can reach out to your payment processing provider for support. The right partner can help you refine your payment sales strategies to ensure that your team can effectively sell and upsell your offerings.

ISOs are an integral part of the payment processing ecosystem. They act as intermediaries between financial service providers and merchants, helping them process their debit card, credit card, and ACH payments.

However, not many are entirely clear about what exactly ISOs do. This article explains the role of ISOs in the payment processing ecosystem, how to become one, and what ISOs should look for in a partner. *Please note that Stax does not currently work with outside ISO partners.

Let’s get started.

What Is an Independent Sales Organization (ISO)?

An independent sales organization (or ISO) refers to an individual or company that acts as a third party between acquiring member banks and merchants to provide payment processing services to the latter.

Typically, large banks (like Wells Fargo or Bank of America) that are members of credit card associations (like Visa or Mastercard), are the ones responsible for accepting transactions from these card networks.

Historically, if a merchant wanted to start accepting payments from their customers, they needed to have a partnership with these banks.

However, this tends to be expensive—and rather limiting—for the average merchant. This is where ISOs come in. ISOs have grown over the last several years because they make payment processing more accessible to businesses.

Independent sales organizations go through a rigorous vetting process to get sponsored by association member banks, so they can handle merchant accounts for these businesses. They are authorized to accept payments on behalf of the association member banks.

Besides representing banks, ISOs may also represent payment processors or other financial service providers. Essentially, they resell the services of the organization they represent and also provide customer support and service on their behalf.

ISOs are also known as merchant service providers (MSP), although Visa uses the term “ISO” more commonly while Mastercard prefers the term “MSP.”

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The Benefits of Forming an ISO Partnership with a Payments Platform

One of the main reasons why many ISOs prefer to partner with a payments platform (or payment services provider), is to create an additional income stream. As such, ISOs earn residuals on the transactions that their merchants process. And even though they may offer various services, this is the primary way that ISOs get paid.

So when a merchant accepts a payment from a customer, the payment processor typically takes a cut, and a small percentage also comes to the ISO as a residual payment. Throughout the lifetime of a merchant’s relationship with a payment provider, these residuals will accrue, making it a valuable revenue stream for ISOs.

ISOs may also offer additional services to merchants, such as recurring billing, custom point of sale solutions, alternate payment methods, etc., to create additional revenue streams.

For similar reasons and benefits above, more and more software businesses (i.e., SaaS companies) are becoming their own ISOs. By adding payments to their suite of capabilities and services, software companies are able to provide more value to users—while monetizing payments—in the process.

By serving as ISOs, SaaS businesses are reducing churn, while at the same time increasing their revenues through residuals on transactions processed on their platform.

What Do ISO Partners Do?

ISO partners form relationships or agreements with banks and other financial services providers for revenue sharing. Based on these agreements, the ISO will offer merchant accounts to businesses and build relationships with them.

Typically, these merchants will deal with the ISO directly for managing their merchant accounts rather than with the end service provider. This means that it’s the responsibility of the ISO to provide the support and service that merchants need in order to be successful.

To that end, ISOs will be helping merchants manage the day-to-day activities related to their merchant accounts including, but not limited to:

• The application paperwork
• Account setup
• Providing the payment technology
• Providing customer support
• Arranging the purchase or lease of terminals
• Setting up the terminals
• Assisting in handling disputes and chargebacks

The ISO partner will also be in charge of managing sales agents who represent them and get merchants to sign up with them.

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How to Become an ISO Partner

In general, ISOs in the US may be “registered” or “unregistered.” Unregistered ISOs can simply sign merchants up on behalf of payment services providers or other registered ISOs, but they cannot hire sub-agents to work for them. Only registered ISOs can do so.

To become a registered ISO, you must be prepared to go through a lengthy and stringent vetting process, as discussed below.

1. Get your business in order

Make sure you have filed your incorporation papers and got your business licenses. File your taxes, have good credit, get legal representation, and ensure that you have everything you need to conduct business in your area.

The organization or bank you want to partner with may ask for your financials from the last two years during the application process. You may also need to produce financial reports of your partners, documentation of your business activities and registration, as well as a detailed business plan.

2. Find a sponsor

The next step is to find a sponsor. This could be a bank or a bigger ISO. In fact, it might be a good idea to work with multiple sponsors and resell their products. Find out how you can apply to become their partner and follow their instructions to the letter.

3. Register with card associations

Once you find a sponsor, the next step would be to register with Visa and Mastercard. This is going to be a lengthy and rigorous process so it’s best that you seek the help of a lawyer. Be absolutely sure that your financials and credit are in order or else the process may be drawn out even further or you may get rejected altogether.

The process can take a few weeks to a few months. Once approved, you’ll need to pay a fee of $10,000 in the first year, followed by $5000 every year, for each card network.

What Should ISOs Consider When Choosing a Partner?

Not all payment platforms are created equal. So you must take the time to research various ISO partner programs to find the ones best suited to your needs. Here are some things you should keep in mind:

• Look for a partner that offers innovative features that help merchants grow their business quickly and seamlessly. Data security is vital to the success of your merchants so make sure your payments partner is PCI DSS compliant. The ability to provide next-day funding is another big plus. Finally, a payments platform that offers robust reporting features can be immensely helpful for merchants to measure the performance and health of their business.
• Even though higher rates may mean more attractive commissions for your ISO, you’ll always be at risk of losing your customers to more competitive rates. So look for a payments platform whose markups are low. For the best results, choose a partner that offers membership-based pricing that gives merchants access to wholesale processing rates.
• If your partner provides support only during business hours, you may end up losing customers. That’s why it’s important to look for payment platforms that offer 24/7 customer support to solve the problems your customers may run into. Make sure to also check what kind of resources or support may be available to you.
• Make sure to check the reviews and ratings your potential partner has received on popular forums. Is responsive customer support a popular theme? Are they invested in the success and growth of their agent partners? Do they have a good reputation among their customers? These are important questions you should ask when deciding which payment platform you should partner with.

Final Words

The process of becoming a registered ISO is not easy. It can be incredibly time-consuming and may involve jumping through a lot of hoops. However, the returns can be immensely rewarding. If you do decide that this is the route you want to go, make sure you find the right payment platform as your partner for this journey.

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FAQs about becoming an ISO Partner

Q: What is an Independent Sales Organization (ISO)?

An Independent Sales Organization (ISO) is an individual or company that functions as the third-party intermediary between acquiring member banks and merchants, providing payment processing services to them. They have the authority to accept payments on behalf of the member banks of credit card associations, like Visa or Mastercard.

Q: How does an ISO partnership benefit a payment platform?

ISOs partnering with payment platforms create an additional source of income. They earn from residuals of the transactions their merchants process. ISO partnerships are also beneficial because they may offer supplementary services like recurring billing, custom point-of-sale solutions, and alternate payment modes to create extra revenue streams.

Q: What services do ISO partners provide?

ISO partners offer merchant accounts to businesses based on their agreements with banks or other financial service providers. They manage the merchant accounts, handle the application paperwork and account setup, provide payment technology customer support, and aid in managing disputes and chargebacks. ISOs also oversee sales agents who represent them and encourage merchants to sign up with them.

Q: How can a business become a registered ISO partner?

To become an ISO partner, a business should get its documents in order, find a sponsor (like a bank or a larger ISO), and register with Visa and Mastercard. This process requires good credit, legal representation, detailed business plans, and two years’ worth of financial reports. Businesses must undergo a stringent vetting process and pay annual fees to each card network to become registered ISOs.

Q: What factors should ISOs consider when choosing a partner?

ISOs should consider factors like the innovative features the partner offers that aid merchant growth, their data security measures, ability to provide next-day funding, robust reporting features, rates, the customer support they provide, their reputation among customers, and the resources or support available to the ISOs when choosing a partner.

Q: What challenges can one expect when becoming an ISO partner?

The process to become a registered ISO can be demanding and time-consuming, involving a detailed application process and strict vetting. The financial commitment is significant, with fees payable to card associations annually. However, the potential returns can be rewarding with the right payment platform partnership.