How to Become an ISO and Start Selling Merchant Services

How to Become an ISO and Start Selling Merchant Services

Payment processing can be a very profitable industry, and as a result, it attracts its fair share of entrepreneurial individuals. Independent sales organizations are one of the most business types for new entrants breaking into the industry because they offer both the potential for excellent earnings as well as the flexibility to operate as an individual or aim for something bigger. But the payments industry is also one built on risk aversion, so there are some hurdles to clear before you can get started selling merchant services. The following is a high-level overview of what those hurdles are, and what you’ll need to do to start doing business as a new ISO. 


1) Start Your Business:

First and foremost, you need to get your business off the ground. That entails going through all of the paperwork and legal processes of creating your company, determining what type of company you want to operate, and getting everything registered with the relevant state and federal bodies. The bad news is there’s quite a bit of paperwork involved, and you’ll probably want to hire a lawyer to help you out with this part. The good news is, depending on what kind of ISO you want to be, this might be the easiest step. 


2) Determine if You Want to be Registered or Independent:

Once you’re all set up, it’s time to determine what kind of ISO you want to start – registered or independent. If you’re looking to get started right away with minimal friction, you’ll want to skip registration (at least for now) and go independent. 

Independent ISOs are, in essence, agents who work for larger, registered ISOs. You’ll still earn residuals on the transactions of all the merchants you sign up, but those merchants will be accessing their merchant services through the registered ISO you’ve partnered with. As an independent agent, the other major consideration is that you’ll be your company’s sole employee, as only registered ISOs can subcontract agents to work for them. 

If you choose to become a registered ISO, you’ll have a long, arduous road to travel to complete your registration, but there will be additional rewards waiting for you at the end of your journey. As a registered ISO, your primary advantage is that you can hire out your own time of independent agents to handle your prospecting and sales work for you. That means that, as your ISO grows, you’ll be able to step back from those tasks more and more to focus on the big picture of steering the ship. That makes the profit potential of a registered ISO much higher, for those willing to go through the process. 


3) Begin the Registration Process:

If you decide to register, the process is straightforward but long, and difficult. That’s because, as a new registered ISO, you represent a serious risk to the payment processors and credit card issuers, and the way they mitigate that risk is by doing their due diligence. In general, the process goes something like this:

Find a Sponsor: to become a registered ISO, you need to find a company willing to take you on to resell their merchant services. That’s likely to either be a payment processor or a larger super-ISO. The companies you apply to work with will vet you, but it’s also important that you vet them as well. Don’t just go with anyone that’ll take you. The relationships you establish in this step will be a huge factor in your ISO’s long-term success, so choose your partners wisely, and, if possible, sign on with as many of the biggest global players as possible. 

Apply with the Card Companies: In addition to applying with your processors of choice, you’ll also need to apply with Visa and Mastercard. The applications to the card companies are easily the most difficult part of this process, as both companies will take their time and carefully examine every aspect of your business and financial history to ensure you’re trustworthy. Expect this process to take six months at a minimum. There are also significant fees involved with registration – as high as $10,000 per application in the first year. 

Play the Waiting Game: Once your applications are in, all you can do is wait. Visa and Mastercard will likely take any of their concerns directly to your sponsor, so it’s possible you could sit for months without hearing a thing back on your application. If you’re lucky, it might only be a matter of weeks, but make sure you account for the snail-like pace that the registration process can take when planning out your new business and how it’ll impact the rest of your life. 

The upside of that waiting period is that it gives you an opportunity to develop a strategy to make your new ISO standout and to carve out your chunk of the marketplace. A great way to do that is to analyze the tools and technology available to assist you in growing your company. IRIS CRM is the world’s leading ISO-specific customer resource management platform and includes a wide variety of sales tools and productivity-boosters designed to help ISOs maximize profitability and provide elevated merchant services. Best of all, it’s designed specifically to grow with you as your new ISO matures. 

For more information on IRIS CRM and its complete suite of sales and productivity tools, contact us today!

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