Independent sales organizations are third-party businesses that resell payment processing services from the major merchant services companies like Fiserv, TSYS, Worldpay, and many others. Independent agents work on behalf of the ISOs and do the sales work of bringing in new merchants to sign. When a merchant signs on with an ISO, their payments are processed through whichever processor the ISO is representing, and the ISO, in turn, earns a small commission on each and every transaction. In turn, if that merchant was brought in by an independent agent, the ISO then pays out a slice of that commission to the agent. Those commissions are known as residuals, and they belong to the ISO and agent for the lifetime of the relationship between the merchant and the payment processor. As a result, while the commissions earned on each transaction are tiny percentages, they can really add up over thousands or even millions of transactions across the lifetime of a merchant’s operations.
Becoming an ISO or Independent Agent
The process of getting signed up as a registered independent sales organization is fairly complex and involves finding a payment processor to take you on, lengthy applications, obtaining necessary licenses, a long waiting period, and significant scrutiny from the major credit card companies. On the other hand, becoming an unregistered independent sales agent is much, much easier, and really only requires an agent to find an ISO willing to hire them. The primary difference between the two is that agents can’t subcontract or hire out anyone below them. There are also differences in how agents can market themselves, but in general, the biggest deciding factor in whether or not to register is the earnings potential limitations agents work under and whether or not lifting them is worth going through the difficult registration process.
Earnings Potential for ISOs and Independent Agents
Since agents can’t hire anyone to work underneath them, their earnings potential is limited to the residuals they can generate on their own. On the other hand, since ISOs can have as many independent agents as they’d like working for them, their earnings potential is much greater – but so are their costs and their exposure to risk. In either case, the key to generating earnings in excess of $100,000 per year is to build up as strong a residual portfolio as possible. While agents often earn signing fees or monthly bonuses for bringing in new merchants, it’s the residuals that matter. The residual split between ISO and agent is generally 40/60, and there is no set commission paid out – each payment processor will payout differently. With that in mind, there is no way to calculate exactly how many merchants an ISO or agent must sign up in order to get to $100,000, but the average merchant account provides roughly $30 per month in residual income. That works out to roughly 277 total merchant signups to get to $100,000 per year. That might sound like a lot if you think of it in a single year, but it’s important to remember residuals never stop coming in as long as a merchant sticks with their payment processor. So it’d require only four to five new merchants per month to go from zero to a residuals portfolio with over $100,000 per year!
Smart ISOs and agents looking to supercharge their ability to sign and board new merchants turn to customer resource management software to streamline and augment their operations. IRIS CRM is the world’s leading payments CRM, providing ISOs and agents with the sales, marketing, and customer service tools they need to build and manage valuable residuals portfolios. For more information on how IRIS CRM can help you maximize your residuals, contact us today.