Merchant Account ISOs Explained – What Are They, How Do They Work, and How Do They Make Money

Merchant Account ISOs

Independent sales organizations are companies that partner with payment processors to resell their services to merchants. ISOs act as representatives of the payment processors, acting as intermediaries and handling customer service and merchant management while the payment processors handle the actual credit card transactions. Many ISOs also employ independent agents to act on their behalf in marketing to, finding, and signing merchants. Those agents essentially act as sub-ISOs, but once they’ve landed a new client, their job is generally done. 


How do Independent Sales Organizations Work Within the Payments Ecosystem?

Registered independent sales organizations have to jump through a lot of hoops in order to be approved to resell merchant services. First, they need to go through all the standard business registration, tax, and legal steps that any other business does. Beyond that, they need to find a payment processor willing to take them on as a reseller – and that’s the easy part! From there, they go through a lengthy application process with the major card companies in which they’re examined and vetted by the credit card companies to ensure that they’re trustworthy and low risk. Once they’ve been approved, an ISO can hire independent agents (who don’t have to go through all of that) and begin landing merchants, a process which essentially entails acting as the middle man between the merchant and payment processor during the application process – a process known in the industry as “boarding.”


How do Independent Sales Organizations Make Money on Merchant Services?

Once an ISO begins boarding merchants to their payment processing partners, the earnings start to trickle in thanks to small commissions known as residuals. ISOs are entitled to residuals on each and every transaction, from all of the merchants that they board, for the entire lifespan of those merchants’ relationship with the payment processor. That means that, while each commission is tiny, over the course of years, residual portfolios build-up to represent immense value. Agents are also entitled to residuals, which are split with the ISOs they work for. Like ISOs, agents are entitled to residuals for as long as a merchant continues to process transactions.


How ISOs Utilize Technology to Maximize Residuals

Many ISOs are embracing customer resource management software as a way to streamline their operations, supercharge their ability to board merchants and enhance their residual management. IRIS CRM, the payments industry’s leading CRM platform, provides ISOs with the tools and analytics necessary to optimize residual portfolio management and ensure timely, accurate payouts to independent agents. The software also revolutionizes the boarding process thanks to the built-in TurboApp automated boarding platform, a system designed to minimize the amount of manual work necessary to board a new merchant. The result is more successful applications, more merchants signed, and fatter residual checks. 

For more information on how IRIS CRM can help new ISOs and agents streamline all aspects of merchant service sales, visit to get in touch with the team or start a free trial today!

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