What Is an ISO In The Payment Industry?

An Independent Sales Organization (ISO) is a third-party payment processing company authorized to handle business merchant accounts. ISOs have relationships with acquiring member banks, allowing them to provide merchant services to their customers. While they often have a questionable reputation, ISOs are more flexible and easier to work with than large banks.

Credit Card networks are major brands like Visa or Mastercard. They are governing bodies with responsibilities such as setting interchange fees, arbitrating between issuing and acquiring banks, and maintaining and improving their card networks. These credit card networks have association member banks that accept transactions from Visa, Mastercard, and other card associations.

Independent Sales Organizations have business relationships with these association member banks. The banks provide backing for the billions of dollars the ISO’s merchants transact. At the same time, the ISO handles the day-to-day activities of a merchant account, starting with the set-up of the merchant account and/or providing the payment technology (gateway, API, etc.).

To become an ISO, one must go through a rigorous vetting process by the member bank to ensure security, legitimacy, and several other strict standards. Once that process is complete, the ISO is considered a “registered ISO” and will then be authorized and sponsored by the member bank.

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