Choosing a payment processing partner isn’t just about finding a way to accept credit cards, it’s about building the financial foundation of your business. With so many players in the payments space, from banks and fintechs to all-in-one platforms, figuring out who does what (and who’s right for you) can quickly get confusing.
One option you may have come across—but might not fully understand—is the Independent Sales Organization, or ISO. While they often operate behind the scenes, ISOs play a crucial role in how businesses accept and process card payments. And depending on your needs, working with one could give you more flexibility, service, and value than a traditional bank.
TL;DR
- An ISO (Independent Sales Organization) is a third-party company authorized to manage merchant accounts and provide payment processing services on behalf of acquiring banks.
- Becoming a registered ISO requires sponsorship from a bank and registration with card networks, plus meeting rigorous compliance, financial, and operational standards.
- When choosing an ISO, look beyond pricing—evaluate their technology stack, customer support, contract terms, industry expertise, and reputation.
What is an Independent Sales Organization?
Simply speaking, an ISO—or Independent Sales Organization—is a third-party payment processing company that is authorized to handle merchant accounts for businesses. ISOs have relationships with acquiring member banks, and this allows them to provide merchant services to their customers.
While they may not be as widely recognized as traditional banks or large payment providers, ISOs are a well-established part of the payments ecosystem. They often offer more personalized service and flexible solutions, which can be especially valuable for small and mid-sized businesses. Like banks, reputable ISOs must meet strict regulatory and security standards to operate, making them a safe and reliable option for payment processing.
How to Become an ISO
Not just anyone can become an ISO.
In order to become one, an individual or organization goes through a rigorous vetting process by the member bank to ensure security, legitimacy, and a number of other strict standards. Once that process is complete, the ISO is considered a “registered ISO” and will then be authorized and sponsored by the member bank.
Independent Sales Organizations play a key role in handling sensitive financial data and ensuring smooth payment processing for businesses. That’s why the path to becoming an ISO involves meeting strict requirements and going through a formal registration process with a sponsoring bank.
Here’s what the journey typically looks like:
1. Understand the requirements
Before diving in, it’s important to know what banks and card networks expect from ISOs. These requirements typically include:
- A formal business entity in good standing
- Strong financials and a clean credit history
- A detailed business plan outlining your sales strategy, target merchants, and operational procedures
- Background checks for business owners and key personnel
2. Find a sponsoring bank
ISOs don’t operate independently—they must be sponsored by a member (acquiring) bank. This bank essentially vouches for the ISO and assumes some responsibility for its activities. Finding a sponsor requires building a relationship, demonstrating your credibility, and showing that you’ll bring value to the bank’s merchant portfolio.
3. Complete the bank’s vetting process
Once a bank agrees to sponsor you, they’ll conduct a thorough review, which may include:
- Auditing your business plan and operations
- Reviewing compliance and risk management procedures
- Conducting interviews or site visits
- Verifying your ability to support merchants and manage payment risk
4. Register with the card networks
After securing bank sponsorship, you’ll need to register with the major card associations (like Visa and Mastercard). This step involves:
- Paying registration fees (which can be several thousand dollars annually)
- Complying with the card networks’ guidelines and rules
- Getting listed as a “registered ISO” under your sponsoring bank
Once approved, you’ll be able to operate as a registered ISO. You can start offering merchant accounts, selling payment processing solutions, and helping businesses get paid. It’s a big responsibility, but also a major opportunity to grow a long-term, scalable business in the payments space.
ISOs vs MSPs: What’s the Difference?
ISOs are often mentioned in the same breath as MSPs (Member Service Providers), and for good reason—they’re nearly identical in function. In fact, some people use the terms interchangeably.
The main distinction comes down to terminology used by the card networks:
- Visa refers to its registered third-party merchant service providers as Independent Sales Organizations (ISOs).
- Mastercard uses the term Member Service Provider (MSP) for the same type of entity.
Aside from the naming conventions, there’s no meaningful operational difference between an ISO and an MSP. They both serve as intermediaries between businesses (merchants) and acquiring banks, and they help merchants get set up with payment processing solutions. Plus, ISOs and MSPs add additional value by providing ongoing support.
In most cases, if a company is a registered ISO with a Visa sponsor bank, it’s also an MSP under a Mastercard agreement. Many payment providers will hold both designations at once—so whether someone says ISO, MSP, or ISO/MSP, they’re usually referring to the same type of business.
In short: while their acronyms differ, the role of ISOs and MSPs remains the same: enabling merchants to accept payments securely and efficiently.
Why Should You Work with an ISO or a Third-Party Payment Processor?
At this stage, you may be wondering why you should consider working with an ISO. Wouldn’t it be more productive to simply go directly to the bank and cut out the middle man? The answer: not quite.
Here’s why.
ISOs offer greater flexibility than banks
While some businesses prefer to partner with their bank for payment processing instead of a third-party organization like an ISO, banks are more expensive and less flexible than third-party processors, and no more secure.
What’s more, ISOs can partner with different acquiring banks and other providers in the payments industry—including POS system vendors, hardware specialists, eCommerce platforms, and other financial institutions.
This allows them to create tailored offerings based on your needs.
The benefit of an ISO is that it allows each separate institution to perform at maximum levels, as each entity is focused on its area of expertise. While banks are able to focus on their unique and vast set of responsibilities, your ISO is able to dedicate the time and resources necessary to deliver the best merchant experience. This allows them to offer true value in places like technologies, rates, and customer support, where banks are unable to.
What’s more, ISOs are in an excellent position to leverage their existing relationships to give clients (i.e., businesses like you) access to better rates and packages.
Related Post: Everything You Need to Know About Credit Card Processing
Higher support availability with ISOs
Big banks aren’t known for providing superb customer service. Because of their scale, it’s often difficult to get personalized support from an actual human being. Independent Sales Organizations typically work at a smaller scale and are thus more accessible to merchants.
You’re able to build stronger relationships with ISOs and can count on them for reliable support.
Faster onboarding and approvals
ISOs often have more streamlined underwriting and approval processes compared to traditional banks. This means you can get up and running with payment processing more quickly, usually in days, not weeks.
Specialized industry expertise
Some ISOs focus on specific verticals—like retail, restaurants, healthcare, or B2B—which means they understand the nuances of your industry. They can recommend solutions that are purpose-built for your type of business, reducing friction and improving performance.
Reasons You May Not Need to Work with an ISO
While Independent Sales Organizations offer a ton of value, they’re not the right fit for every business. Depending on your size, needs, and technical capabilities, you might be better served by another type of payment solution. Here are a few scenarios where working directly with an ISO might not be necessary.
You process a low volume of transactions
ISOs tend to shine when supporting growing businesses or those with complex payment needs. But if you only process a small number of transactions each month, the setup and monthly fees of an ISO-backed solution may not be worth it. In this case, working with a straightforward, no-frills payment processor would be a better fit.
You don’t need customized payment features
One of the benefits of working with an ISO is the ability to customize your payment stack. But if you’re not looking for anything beyond basic credit card acceptance—no need for special integrations, recurring billing, or multi-channel support—you may not need that level of flexibility.
Considerations for Assessing an Independent Sales Organization
Not all ISOs are created equal. To unlock the benefits mentioned above, it’s important to partner with an organization that has:
- Strong industry relationships
- Robust technology capabilities
- Dedicated team members
- Your business’ best interests at heart
With that in mind, here are the factors you should consider when choosing who to work with. If you’re currently in discussions with an ISO agent, be sure to bring up the following considerations:
1. Hardware and software
Ensure that the ISO offers solutions that play nicely with the tools and platforms you’re using in your business. For example, if you’re selling in-store, then your ISO should offer you a point of sale software and hardware that allows you to take payments with ease.
If you’re selling online, then your provider should connect with the right eCommerce platforms and payment gateways, so you can take online payments.
2. Payment types and methods supported
While being able to facilitate credit card payments are table stakes, your business may benefit from additional payment services. Capabilities like ACH transfers, invoicing, recurring billing, etc., can all come in handy, so it’s best to work with an ISO that has a wide breadth of payment offerings.
3. Pricing and fees
There are a range of costs associated with working with ISO’s. These can include things like transaction fees, registration fees, admin costs, markups, etc. Make sure you outline these costs when shopping around for your ISO, then compare them with other providers. This will enable you to figure out the right vendor to choose.
4. Reputation and track record
Do some digging on the ISO’s history. How long have they been in business? Do they have experience serving companies in your industry? Look for reviews, case studies, or testimonials from real customers. A solid track record of satisfied merchants is a strong sign you’re dealing with a reliable partner.
5. Customer support and responsiveness
Payments are mission-critical—so when things go wrong, you need a team that has your back. Ask about support hours, service-level agreements (SLAs), and whether you’ll get a dedicated account manager or have to go through a call center. The best ISOs offer fast, accessible, and human customer service.
6. Contract terms and flexibility
Some ISOs lock businesses into long-term contracts with early termination fees, while others offer more month-to-month flexibility. Review the fine print carefully and ask about things like:
- Contract length
- Termination clauses
- Rate changes over time
- Equipment leasing terms (if applicable)
Final Words
Stax is an ISO and proud to deliver the best payment technology solutions to drive success for every business type at scale. . Stax does not currently take on other ISOs as partners.
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Quick FAQs about an ISO
Q: What is an ISO in payment processing?
An ISO, or Independent Sales Organization, is a third-party company authorized to handle merchant accounts on behalf of businesses. These organizations work with acquiring banks to provide merchant services, allowing businesses to accept credit card payments and manage transactions efficiently.
Q: How do ISOs differ from traditional banks in payment processing?
ISOs offer greater flexibility and often more personalized service compared to traditional banks. Unlike banks, ISOs can partner with various acquiring banks and other providers, allowing them to offer tailored solutions that meet unique business needs. While banks focus on a broad range of financial services, ISOs specialize in payment processing, ensuring businesses receive focused support and competitive rates.
Q: What are the benefits of working with an ISO for payment processing?
Working with an ISO provides several benefits, including greater flexibility, access to a variety of payment solutions, and typically better customer service than large banks. ISOs can offer competitive rates and packages by leveraging their relationships with multiple banks and financial institutions. They also provide dedicated support, making it easier for businesses to manage their payment processing needs.
Q: Are ISOs and MSPs the same in the context of payment processing?
ISOs and MSPs (Member Service Providers) are essentially the same, with the primary distinction being their terminology usage by different card associations. Visa refers to these entities as ISOs, while Mastercard uses the term MSP. Both serve as intermediaries between merchants and payment processors, facilitating credit card payments.
Q: How should a business choose the right ISO for their needs?
When choosing an ISO, businesses should consider factors such as the range of payment methods supported, pricing and fees, technology capabilities, and the quality of customer support. It’s crucial to partner with an ISO that aligns with your business needs and offers solutions that integrate seamlessly with your existing systems.
Q: Why might a business prefer an ISO over a direct bank relationship for payment processing?
Businesses might prefer an ISO over a direct bank relationship due to the flexibility, personalized service, and competitive pricing that ISOs can offer. ISOs often have the ability to tailor services to specific business needs, providing more targeted solutions than traditional banks.
Q: What role do ISOs play in the payment processing ecosystem?
ISOs act as intermediaries that facilitate the relationship between merchants and acquiring banks. They manage merchant accounts, handle transaction processing, and provide necessary technology and support to ensure smooth payment operations. Their role is crucial in enabling businesses to accept and process credit card payments efficiently.
Q: What should businesses be aware of when evaluating ISO costs?
When evaluating ISO costs, businesses should be aware of various fees, including transaction fees, registration fees, and potential markups. It’s important to compare these costs across different ISOs to ensure you’re getting the best value for your payment processing needs. Additionally, understanding the pricing structure—whether it’s flat-rate, tiered, or interchange-plus—can help in making an informed decision.
