Independent Sales Organizations (ISOs) play an important role in facilitating payment processing between merchants and financial companies.
At its core, an ISO seamlessly bridges the gap between merchants—ranging from small local retailers to e-commerce giants—and the complex web of credit card and payment processing services.
Establishing your company as an official ISO requires a fair amount of preparation and understanding of the modern business landscape.
To help navigate the intricacies of becoming a successful Merchant Services ISO, OnCore Payment Technologies developed this useful guide, providing insights and actionable steps to assist you on your journey.
The first step to becoming an ISO is to create and register your business. This is important: There are unregistered ISOs, but they mostly serve as independent agents for a registered ISO or payment processor. To sell payment services under your own company name, you’ll need to register it.
This process involves several crucial elements:
The most prevalent company structures for ISOs are corporations, partnerships, limited liability companies (LLCs), and sole proprietorships. Ultimately, it's essential to analyze the merits and drawbacks of each, and seek guidance from an attorney before making your decision.
This is a pivotal step that ensures your ISO complies with state regulations and enables smooth operations.
For corporations, you’ll need to file Articles of Incorporation, while LLCs will need to file Articles of Organization. You may require a business license or additional permit from your state in order to operate.
You’ll also need to register with your state and local government to pay taxes, as well as receive a federal Employer Identification Number (EIN) from the IRS.
Gaining sponsorship from member banks or payment processors is a pivotal milestone in becoming a Merchant Services ISO. It allows you to process payments through their institutions and gain credibility and access to more business opportunities.
Begin by researching the member banks and payment processors to get a better idea of their reputation, track record, and services they offer to determine which works best for you.
Securing sponsorship may involve connecting with various banks, a process that can require some time and effort. Begin by focusing on local institutions and be sure to visit their websites to verify that they are Visa or Mastercard associations.
Member banks and payment processors will want to see your business plan before agreeing to become a sponsor, so it's important to craft a comprehensive business plan that outlines your goals, target market, pricing strategies, and revenue projections.
Determine the range of services you'll offer—whether retail, e-commerce, mobile, or a combination, and develop a robust marketing and sales strategy to attract merchants by highlighting your unique value proposition.
Depending on how your ISO is structured,establishing a list of rules and policies may be necessary. Corporations will need a set of bylaws at their principal place of business, LLCs can form an operating agreement, and partnerships should have a detailed partnership agreement in place.
In addition to your business plan, banks will require documentation when you apply for sponsorship, including financial statements for the business or personal tax returns, personal financial statements for each principal, sales materials and solicitations, and a list of existing ISO agents and employees.
Once your application is approved, you’ll have to register with your member bank and pay your registration fee. This typically costs around $5,000 for each credit card association, and covers the annual registration, which must be renewed each subsequent year to maintain sponsorship status.
With your ISO in operation, you’ll want to look into working with a reliable payment processing company like OnCore to expand your market offerings with top-of-the-line products and packages for merchants of all sizes and industries.
One of the most important differentiating factors between ISOs is the amount of solutions and services they can provide, and with OnCore at your side, you'll have access to an extensive suite of cutting-edge offerings to empower your merchant clients with everything they’ll need to take charge of their finances.
OnCore helps your merchants effortlessly accept payments from all major credit and debit cards, as well as various channels such as in-store, online, and mobile, providing their customers with a seamless experience across platforms. Our secure payment gateways also keep customers' sensitive payment information protected at all times.
Our processing solutions can be easily integrated into many existing systems. In addition, our state-of-the-art payment terminals and POS systems feature user-friendly interfaces and customization options that can easily be tailored to fit the specific needs of any business.
OnCore’s dedicated in-house merchant services and technology support teams are available 24/7/365 to provide additional assistance and help ensure continuing success for you and your merchant clients.
To learn more about our expansive suite of payment products and services, and to inquire about becoming an ISO, Contact OnCore today.