What Is an ISO?

As a business owner, you have a lot of options when it comes to payment technology. There are a number of different ways you could accept credit cards, and it pays to understand which type of provider is best for your business.

Your business has unique needs, so it is important that your payment processor can meet those needs and be a true partner with you as your business grows. Understanding the different types of merchant services providers is the first step to making the best choice.

Simply speaking, an ISO – or Independent Sales Organization – is a third party payment processing company that is authorized to handle merchant accounts for businesses. These types of organizations sometimes get a bad reputation, and in some cases, business owners feel like it is better to go with a large banking institution for their payment processing. This is not always the better option, as ISOs are typically more flexible and easier to work with than large banks, and are just as structured, safe, and secure.

In order to really understand what an ISO is, we must first define some terms. Associations 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. We also have association member banks. These are large banking institutions like Bank of America or Wells Fargo that accept the transactions from Visa, Mastercard, and other card associations.

Click here to watch our episode of Biz with Liz that reviews the key players in the credit card processing industry!

Independent Sales Organizations have special relationships with these association member banks. The banks provide backing for the billions of dollars that the ISO’s merchants transact, while the ISO handles the day-to-day activities of a merchant account – setting up the account, providing the payment technology and support, and assisting with the unique processing needs of the merchant.

Not just anyone can become an ISO. In order to become one, an individual or organization goes through a rigorous vetting process by the member bank to ensure security, legitimacy, and a number of other strict standards. Once that process is complete, the ISO is authorized and sponsored by the member bank.

Is a third party payment processor right for your business?

As mentioned above, some merchants prefer to partner with their bank for payment processing instead of a third party organization like an ISO. Typically speaking, banks are more expensive and less flexible than third party processors, and no more secure.

The benefit of an ISO is that it allows each separate institution to perform at maximum levels, as each entity is focused on their area of expertise. The banks are able to focus on their unique and vast set of responsibilities, while your ISO is able to dedicate the time and resources necessary to deliver the best merchant experience. This allows them to offer value in places where banks are unable – like technologies, rates, and customer support.

When looking into a merchant services provider for your business, consider an ISO. Do your research, and make sure you keep all of the unique needs of your business in mind as you explore your options. Fattmerchant is an ISO, and is proud to deliver technology solutions for every business type, incredible savings, and real customer support for every member.

If you are interested in learning more about Fattmerchant, please visit our website at fattmerchant.com or give us a call at 855-550-3288!

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