18 Jan 4 Common Misconceptions About ISOs
The payment processing industry is a convoluted one, filled with so many moving parts that it can be difficult to keep up. ISOs are one of those moving parts, and one that is often misunderstood. You may have heard that ISOs are more expensive. Or maybe you’re unsure of what exactly an ISO is. In this article, we’ll address the misinformation surrounding ISOs, but first, you’ll need to know what they are.
What is an ISO?
ISO stands for Independent Sales Organization. MasterCard’s preferred term for ISO is MSP (Merchant Service Provider), but the two are virtually the same. An ISO is an individual or organization that is not a card association member but has a banking relationship with association members, usually involving the signing and maintenance of new accounts.
According to industry research, 80% of merchant accounts for card processing are opened by Independent Sales Organizations. But what does an ISO actually do? Isn’t involving another outside party just going to complicate the process? You may have heard conflicting information, so let’s clear up the many myths and inaccuracies surrounding ISOs and their role in the payment processing industry.
Going directly to a large processor will get you cheaper rates
One of the most prevalent myths surrounding ISOs is that they’re just a middle-man that will end up costing more than going directly to a large processor. However, small ISOs can often be much more flexible with their pricing for two reasons:
1.Overhead – Small to medium-sized ISOs don’t have the massive overhead of a huge corporation. The cost of maintaining a workforce of 22,000 and millions of merchant accounts doesn’t leave much wiggle room to pass savings on to banks. However, partnering with a right-sized ISO gives you access to the resources of a large processor without the price tag.
2. Partnership – Let’s say your bank has 500 merchant accounts and you partner with a large processor that has 6 million total merchant accounts. How much does that processor rely on your business (.0083% of their accounts)? What’s their incentive to keep your merchants priced competitively? Will they be a true business partner for your bank? Probably not.
There’s no difference between an ISO and a reseller.
An ISO is not a reseller. The term “reseller” is used to describe any person or entity that sells the merchant services of another organization or processor. In short, anyone can be a reseller, and resellers are not required to meet the rigorous standards that ISOs are.
ISOs must be registered with the card associations and pay an annual fee to maintain their status. This adds an additional layer of security for you, as ISOs are also required to be compliant with all card brand regulations.
Before considering a partnership with a processor, make sure they’re compliant with industry standards. There should be a disclosure indicating that the company is a registered ISO of a specific sponsorship bank. Usually, this disclosure appears on the ISOs marketing materials or website.
An ISO can’t provide the same products and services that a large processor can.
Because of their ability to maintain partnerships with more than one processing platform, ISOs are often in a better position to offer the latest payment innovations. If you sign directly with a large processor, they won’t be able to offer solutions from their competitors, but an ISO can work with a variety of providers to find the products and services that are the best fit for your customers.
An ISO can’t provide the same support that a large processor can.
While large processors have many resources, they cannot offer the personal service and attention that a small to medium-size ISO can. If a merchant calls customer support at a sprawling corporation, they will likely wait on hold for extended periods of time just to reach someone who’ll probably need to escalate the issue to their manager. The best ISOs will have dedicated support lines answered by a real person with extensive industry knowledge who can frequently help the customer without having to escalate to a manager. Check out our article on what should happen when you call customer support for more on this.
One of the reasons merchant services can be so complicated is that the industry is subject to both rapid technological advancement and a constantly changing financial landscape. Don’t let misconceptions stop your bank from choosing the right partner to help you navigate those changes. The right ISO can provide the best of both worlds—the resources and direct pricing associated with larger processors and the customer service and customization that your customers require.
BASYS Processing as a business partner
If your processor isn’t delivering strategies to help grow your program and personal service to your customers, please call BASYS Processing at (800) 386-0711. Let’s talk about creating a business partnership that will help you meet and exceed your goals.
BASYS Processing features:
• A friendly, live voice will answer the phone when you or your customers call; no automated phone systems.
• In-house PCI Compliance team to walk your customers through the process step-by-step, improving security and reducing costs.
• A knowledgeable Account Manager assigned to your bank to support your needs.
• Thorough Market Analysis followed by mutual plans and goals to grow your portfolio.
• In-depth initial training and ongoing bootcamp training for bank staff.
A full suite of turnkey marketing assets that can be customized with your bank branding.
About BASYS Processing
BASYS Processing provides credit card and debit card processing services, plus solutions that include terminals, virtual terminals, e-commerce, mobile, and point-of-sale, customized to fit any need. Banks, associations, and software partners depend on us to strengthen their reputations and relationships with their customers by providing remarkable service paired with ultimate flexibility and pricing. Merchants depend on us to make accepting credit cards and debit cards convenient, safe and affordable. BASYS was founded in 2002 on one philosophy: to take care of our merchants, partners, and employees so they never want to leave. We are dedicated to working one-on-one with our customers to design the perfect solution. BASYS is Personal Payment Processing.
Learn more at basyspro.com, and connect with us online at: