Cash is rapidly becoming a thing of the past. With credit cards and contactless payments establishing themselves as the undisputed king in a post-COVID world, there is an enormous amount of opportunity abound in the payment processing space. One of the most prominent and relatively easy to access of those opportunities is merchant services. A merchant provider is a company that facilitates electronic transactions as they move from a customer to the merchant’s bank. There are many layers involved in that process, ranging from enormous global corporations all the way down to individual sales agents. Each has a role to play, and each earns a slice of the pie on every card transaction that merchants process.

The million-dollar question is, how do you get in on the ground floor of that process and start earning a piece of that pie for yourself? There is no one answer to that question, but the following is a quick breakdown of five of the most important steps and considerations involved. 


1) Choose Your Format

Becoming a merchant provider makes you an independent sales organization (ISO) – a business that finds and recruits merchants on behalf of payment processors in exchange for commissions, known as residuals. There are two different types of ISOs, each with very different capabilities and, more importantly, barriers to entry. The two types are registered and unregistered, and to set out on your journey to begin selling merchant services, you will need to make a choice. 

Unregistered ISOs are effectively independent agents who work on behalf of a larger, registered ISO. In this scenario, you would be your own boss but also the sole employee of your business – which hampers long-term earning potential, but makes getting started much easier. As a registered ISO, you can hire independent agents to sell on your behalf, greatly improving your earning potential, but also greatly increasing the cost and difficulty of getting started. 


2) Assess Your Skill Set

Whether you’re registered or unregistered, being a merchant provider is a sales job. Because revenue is commission-based, your abilities as a salesperson will be the largest factor in your success, at least initially. Not only that, but those commissions represent a fraction of a percent of each sale your merchants generate. While commissions build up over time as your merchant roster grows, the pace from the starting gun can feel like a crawl. 

If you already have a strong background in sales, then you are ready to skip to step three. If you don’t, you can certainly learn on the job, but your residuals will suffer, and in the slow, early days of your business, underperforming could be disastrous. Gaining experience in a sales environment that is at least partially salaried prior to moving into a totally commission-based industry like merchant services sales is a good idea. If you are going to take the plunge without a sales background, make sure to have a healthy reserve fund to keep you afloat until you learn to swim. 


3) Understand the Market

If you are looking to become a merchant provider, there is a good chance you are already coming from somewhere else within the payments industry. That is a good thing because the merchant services market and the industry as a whole can be complex, and your understanding of them will be another key to your success. 

Every time a credit card transaction is processed, a fee is charged made up of a small percentage of the total and a small fixed charge. If the interchange rate – the fee charged by the bank itself – is 1.5% + $0.10, then the payment processors you work for are going to charge you a small markup on that. You, in turn, will mark that up further until we arrive at the final fee charged to the merchant. If you don’t understand everything that’s going on each step of the way along the payment chain from the merchant’s register to the acquiring bank, you’re going to be leaving money on the table inadvertently. That makes it important to have a strong understanding of the industry before you hang your shingle as a merchant services provider, especially if you’re coming in from outside the industry. 


4) Consider Specializing

On the face, merchants might all seem similar– they sell something, they need to be able to get paid for it, and that is where you come in. In reality, different types of merchants can have very different needs. ISOs can also face very different fees, as the interchange rates set by Visa and Mastercard vary by industry. Being able to act as a jack of all trades capable of serving merchants in any sector is difficult, and best left to large ISOs. When starting out, you are much better off choosing a niche. A narrower focus allows you to gain a deep understanding of one industry’s needs rather than a shallow understanding of many. That will enable you to provide much better service to your recruits. At the end of the day, your service quality and your rates are the only reasons merchants have to sign with you over one of your many competitors. 


5) Find the Right Partner

Once you are ready to enter the market and you have selected a niche to focus on, you will need to find a partner to take you on. If you are aiming to become an unregistered ISO, that will mean finding a registered ISO willing to take you on as an agent. That’s a relatively straightforward process more akin to finding a job than it is to what registered ISOs have to go through. 

If you’re looking to register in order to maximize your growth potential, you’ll, unfortunately, have a number of major hoops to jump through. First, you’ll need to find a payment processor willing to sponsor you, and they’re going to want to do their due diligence to make sure you’re reliable. Then, you’ll have to apply for registration with the credit card companies, and that requires months of due diligence, including a thorough examination of your background and finances. It also requires you to pay a fee of $10,000 for each credit card company you register with, meaning at least $20,000 upfront just to get the top two – Visa and Mastercard. After the first year, that drops to $5,000 per card, but that fee will be required every year for as long as you operate. 


6) Gear Up

Once you are in business as a merchant provider, you will face tough competition from day one – competition that is likely more market-savvy and more experienced than you. Whether you’re registered or unregistered, you need to find a way to generate a competitive advantage as quickly as possible in order to carve out market share. There is no better way to generate an advantage over legacy competitors than to beat them with technology, and there is no better technology available to ISOs than a payments CRM. 

Customer resource management software centralizes everything you need to run your business and recruit merchants into a single, centralized point of control. CRM software supercharges your lead collection and management, and puts the full data on each of those leads at your fingertips no matter what other task you may be doing within the system. Whether you’re drafting an email, working on support tickets, making sales calls, running reports, or anything else, you will never be more than a click or two away from the customer data and business intelligence you need. 

IRIS CRM is the payments industry’s top customer resource management platform, offering a full suite of tools designed specifically to help ISOs operate more efficiently, recruit merchants more effectively, and maximize residuals. If you’d like to find out more about how IRIS CRM can help you establish an advantage over your competition right out of the gate, schedule your free guided demonstration of the software now!