All You Need to Know about Independent Sales Organization

All You Need to Know about Independent Sales Organization

Independent Sales Organization (ISO) may be a term that’s thrown around quite a bit within the payment card industry, however not always accurately. during this article, we’ll check out exactly how the MasterCard Associations of Visa and MasterCard define what an ISO is, how ISOs relate to the Associations and their member banks, how they’re registered with them, and what functions they perform.

What Is an Independent Sales Organization (ISO)?

The payment card industry defines an ISO as a corporation or person who isn’t an Association member (meaning not a Visa or MasterCard member bank), but which features a credit card relationship with an actual Association member. Such a relationship can involve various things, like acquiring or issuing functions, soliciting new customers, arranging for terminal purchases or leases, providing customer service, soliciting cardholders, etc.

What Is a Member Service Provider (MSP)?

An ISO is usually mentioned as a Member Service Provider (MSP), although the definitions of those two terms aren’t always synonymous. the simplest thanks to explaining the difference between the 2 is that MasterCard refers to its ISOs as MSPs, defining a Member Service Provider as “a non-member that’s registered by the Corporation [MasterCard] as an MSP to supply Program Services to a member, or any member that’s required to register, within the Corporation’s sole discretion, and has been registered as an MSP to supply Third Party Processor Program Services to a different member.” Members of MasterCard and Visa must register all of their ISOs / MSPs with the applicable Association.

The Best ISO merchant services

What Are the ISO’s / MSP’s Relations with Member Banks?

It is important to know that ISOs and MSPs aren’t banks in which the particular handling of the merchants’ money is completed by the acquiring (processing) bank that has contracted with the Independent Sales Organization in question. Each ISO / MSP must be sponsored by such a processing bank, member of Visa and/or MasterCard, so as to be registered by either MasterCard Association.

Typically, processing banks are members of both Associations (in principle it’s possible that a bank may prefer to be a member of just one of them, but I haven’t seen such an arrangement) and therefore the registration process for every Association occurs simultaneously. An ISO / MSP is often sponsored by multiple member banks. Processing banks also can perform the work of their ISOs / MSPs, but they rarely do so and like to consider issuing credit cards and acquiring payment transactions instead. which is understandable — bankers aren’t the simplest salesmen.

ISOs / MSPs must display the name of their sponsor bank on their website and marketing materials. Most disclosures are located within the footer of the ISO / MSP website. Our disclosure notice reads:

“UniBul Merchant Services LLC may be a registered ISO / MSP of Wells Fargo Bank, N.A., Walnut Creek, CA”

How are ISOs / MSPs Registered with Visa and MasterCard?

The ISO / MSP registration process is sort of rigorous. It starts with the applicant finding a depository financial institution to be its sponsor during the registration process. Prospective ISOs / MSPs then need to prove that they’re financially ready to perform the duties that they’re applying. The documents applicants are required to submit, alongside their application package include:

Two years of business financial statements or personal tax returns (last 2 tax years) for all principals.
Personal budget for every principal.
Executed Articles of Incorporation / Partnership documents.
Detailed business plan.
Copy of sales materials/solicitations.
Complete list of current ISO employees/agents.

In addition, all principal owners have their credit history checked and evaluated to make sure that they’re responsible for credit.

What Are the ISO / MSP Registration Fees?

Upon approval, the applicants must pay registration fees of $5,000 for every MasterCard Association. per annum thereafter, the corporate has its registration reviewed and extra fees of $5,000 per Association are due upon approval. In other words, you’ll be paying $5,000 for your Independent Sales Organization registration renewal and another $5,000 for your Member Service Provider one.

What Are Agents?

ISOs / MSPs can check-in sales agents to assist them to sign new merchants. MasterCard defines an agent as “an entity that gives Program Services to a member and isn’t registered by the Corporation [MasterCard] as an MSP.” Sales agents aren’t required to be registered directly with the Associations of Visa and MasterCard, but the ISO / MSP is handling the method, which quite straightforward anyway. Furthermore, the registration fees are purely nominal, $50 per annum approximately. Finally, sales agents can only introduce themselves as representatives of their Independent Sales Organization / Member Service Provider and can’t advertise their own business name as a service provider.

Which is that the Better Option?

So do you have to choose a full-blown ISO / MSP registration, with all of the associated effort and costs or do you have to choose to be a sales agent? Well, in my experience a minimum ofthe solution to the present question depends totally on what proportion of new processing volume you’re adding to your existing portfolio. If I were considering what to try to do today, I might request as many ISO / MSP sponsorship proposals as I could get then evaluate them very carefully. If it seems that the higher pricing I might get as an ISO / MSP would offset the continued expenses, I might choose it.