How to Become an Independent Sales Organization

Independent Sales Organization

Independent sales organizations are essentially payment processing resellers that act as middle-men between the major processors and merchants in need of processing services. It’s a potentially lucrative field, and as such, there are constantly new entrants looking to jump into the game to claim their slice of the payment processing pie. 

The rules for becoming an ISO may differ in various countries, but in the United States and in general, independent sales organizations are either unregistered or registered, and it’s very important to understand the difference before you get started. Unregistered ISOs are really just independent sales agents that find and sign-up merchants on behalf of registered ISOs and payment processors. Importantly, unregistered ISOs are not allowed to have sub-agents working for them. Registered ISOs, on the other hand, are actual companies that, thanks to their registration, can hire unregistered ISOs and independent agents to work underneath them. Becoming a registered ISO is a much lengthier and more stringent process than becoming an unregistered ISO, and so the rest of this article will focus on that process. Because of the difficulty involved, you should think long and hard about whether it’s worth it for you to take the registered route. 


1) Take Care of the Nitty-Gritty Details of Your Business

Once you’ve decided on the registered route, the first step is to take care of the administrative work involved in getting your business registered. Things like choosing a business type, filing incorporation papers and obtaining business licenses, seeking out legal representation, setting up necessary tax accounts, and all of the other necessary legal steps to actually operate a business in your area must be performed. This is far from an exciting process, but it’s incredibly important that you do everything correctly, because once you begin dealing with the big card companies, your business is going to be under a high level of scrutiny right from the start. 


2) Find a Sponsoring Processor, Bank, or ISO

Once your business is all set up, it’s time to look for a sponsor. A sponsor is essentially the organization that you’re going to resell services for. It could be a bank, a payment processor, or even another larger, well-established independent sales organization. It is not Visa or Mastercard – that’s the next step. Luckily, there are a huge number of payment processors, banks, and large ISOs to choose from, so the pool of available sponsors is deep, to say the least. However, not all sponsors are created equal, so it’s in your best interest to do some research into who the best players to work with are. Some of the biggest, most popular processors that most ISOs go with include WorldPay, Vantiv, TSYS, and Fiserv/First Data. Once you’ve chosen a sponsor, you need to get in contact with them to find out how to apply and to ensure you follow their application procedures to a T. There is also no need to choose only one sponsor, and it’s likely in your best interest to resell for as many of the top players in the industry as possible, so apply to as many as you can.


3) Register with Visa and Mastercard

Now comes the most difficult part – getting in with Visa and Mastercard. Registering with these two giants is a complex, lengthy, and often difficult process, so it’s a smart move to hire a lawyer familiar with the ins and outs of the registration to ensure everything goes smoothly. The registration process involves a lengthy application and a lot of scrutiny from Visa and Mastercard. Because you’ll essentially be reselling their services in the big picture, and because they’re so protective of their reputations and weary of fraud, they’re going to go through your application with a fine-toothed comb. That means going through not only the financials of the company but also an in-depth review of the financials and credit history of you and your company principals. You absolutely have to ensure you have your credit and finances in order prior to registering; otherwise, an already-long process will be drawn out even further or stopped outright. 


4) Play the Waiting Game

Once applications have been filed with your sponsors and the major card companies, it’s time to wait. The sponsor applications generally aren’t too bad, but the registration process with Visa and Mastercard can be very lengthy. It could be a matter of weeks, but it isn’t uncommon for a response to take a matter of months – and with good reason, there is a lot for them to check into before they approve you. But once you are approved, the largest hurdle is behind you. You’ll still need to be on your best behavior for quite a while, and you can expect to pay fees of $10,000 per card company in the first year, and $5000 every year thereafter. So, if you’re registering with both Visa and Mastercard, that’s $20,000 in the first year alone. 


5) Begin Signing-Up Agents

Once you’re approved by the card companies and your sponsor processors, you can begin signing up merchants and, more importantly, signing up agents to work under you. Agents are the heavy lifters of your ISO because they go out and do the dirty work of digging up leads and signing-up merchants through your ISO. You can certainly perform these activities yourself, but if you were going to do that, there was no real reason to register in the first place. Having a large team of talented, dedicated agents working under you is the key to growth and profitability, so you want to ensure recruiting is one of your top priorities. Simply put, you focus on bringing in the agents, and let the agents focus on bringing in the merchants. 


6) Carefully Manage Your Agents, Merchants, and Portfolio to Nurture Growth

Once you’ve got a team of agents bringing in merchants on your behalf, your job becomes managing that roster of agents, your ever-growing list of merchants, and your residuals portfolio to maximize growth and profitability. Residuals are the small fraction of each transaction that you earn from the processors as payment for your services, and they’re the lifeblood of your ISO. Accurately calculating, tracking, and managing those residuals is of absolute importance, because not only do they ensure you get paid, but they’re also how your agents get paid, as each agent is entitled to a tiny slice of your tiny slice of the pie. Accurately calculating the residuals you owe your agents and paying them out as quickly as possible is the key to keeping your agents happy and bringing in merchants for you rather than one of your competitors. 


Once your ISO is up and running, technology is going to become your best friend in ensuring that everything operates smoothly, your incoming and outgoing residuals are accurate, and your portfolio continues to grow steadily over time. IRIS CRM, the leading customer resource management platform in the payment industry, is the ideal tool to help you keep your new ISO on track and maximize profitability while minimizing the headaches associated with running your business. It includes a full analytics suite including advanced residual calculation and reporting, a payments suite enabling you to pay out your agents promptly and accurately, a lead management suite enabling you and your agents to offer an elevated sales and recruiting process, a full communications suite, and much more. 

For information on the full list of features included in IRIS CRM and complete details on how it can help carry your new ISO from startup to long-term success, sign-up for a free guided demonstration today. 

Schedule Demo