There are many moving parts in the payment industry, and keeping track of everyone involved in processing a credit card transaction can be a difficult task, especially for newer merchants just getting started. Independent sales organizations, or ISOs for short, are one of the most important types of business in the industry, and it’s important that merchants understand what they do, because an ISO is the direct point of contact for the vast majority of them. The following is a crash course explaining what ISOs do, why they’re so valuable to payment processors and merchants alike, and how they use ISO CRMs to work smarter and provide better service. 

 

What is an Independent Sales Organization?

An independent sales organization is a company that acts as a link between merchants and payment processors, reselling payment processing services and providing ongoing support in exchange for a small slice of each transaction. 

Independent sales organizations find and recruit merchants and sign them up for payment processing services. They onboard the new merchants to one of their processing partners, and upon approval, the ISO begins earning a percentage of the fees charged on each sale the merchant makes – a commission known in the industry as a “residual.”

Some ISOs – called retail ISOs – pass off the merchants to their payment processors and are hands-off from there, in some cases not even providing ongoing service and support. In other cases, independent sales organizations known as wholesale ISOs actually perform part of the underwriting process, analyzing the risk each new merchant represents and whether it’s worth the potential reward of working with them. 

In all cases, the ISO acts as a middle layer in the greater payment processing industry, effectively earning commissions for brokering relationships between merchants and payment processors. 

 

What ISOs do for Payment Processors

Payment processors need independent sales organizations because ISOs can focus specifically on the time and service-intensive role of recruiting merchants and maintaining long-term relationships. While some processors do work directly with large merchants, the reality is that it just isn’t possible for the small handful of payment processors that lead the industry to deal with the millions of merchants across the globe that need their services. Working with an ISO allows payment processors to focus on providing the infrastructure necessary to process hundreds of millions of transactions and billions of dollars in sales each year, without having to worry about the sales process and ongoing customer support. 

As is the case in most economic situations, letting each specialist focus on what they do best results in the most efficient outcome for everyone involved, ensuring that both the processors and the ISOs make as much money as possible while the merchants receive the service and support they need to offer their customers flexible, convenient electronic payments.

 

What ISOs do for Merchants

On the merchant side, ISOs represent a way for even the smallest businesses to access the services and one-on-one attention they need to succeed. The payments industry is complex, and choosing a new processing partner can be a daunting task for even the most experienced merchants, let alone brand new ones signing up for their first merchant accounts. Going it alone can be intimidating, and can easily result in a merchant ending up with either the wrong processing services to meet their needs, or a fee structure that costs them more than they need to spend. 

Working with an ISO enables merchants to receive one-on-one attention right from the beginning of the recruiting process, ensuring they can seek expert guidance and get answers to their questions with ease. ISOs also give merchants more options by exposing them to services from multiple payment processors rather than pigeonholing them into a single processor’s offering. Finally, working with an ISO ensures that, as a merchant grows and moves through their journey as a business, they’ll have a close partner to cater to them as their hardware, software, and processing needs change. 

 

How ISOs Use Technology to Work Smarter

One way independent sales organizations improve their ability to recruit for processors and provide great service to merchants is through technology. ISOs use specialized customer resource management (CRM) systems designed specifically for the payments industry to improve everything from lead management, to the sales process, to merchant onboarding, to residuals management, and beyond. 

Leading ISO CRMs like IRIS CRM enable ISOs to streamline all of the most important areas of operations, saving both time and money. For example, IRIS CRM’s TurboApp boarding system automates merchant onboarding, eliminating time-consuming and error-prone manual data entry and reducing total time from 30 minutes or more to five or less. ISO CRMs also allow independent agents to deliver a more personalized, laser-focused sales process to merchants, ensuring strong relationships can be built with prospects starting on day one. 

To find out more about IRIS CRM’s full suite of tools and how an ISO CRM can revolutionize merchant acquisition and support, schedule a free guided demonstration of IRIS CRM today.