Where did your business go for its card processing facilities ? If you’ve been taking cards for years and never switched then its odds on you went to your own bank. Nowadays, savvy business owners are shunning the high street banks and traditional card processing companies and turning to ISO’s for their payment needs. At Cardswitcher, our partners are predominately ISO’s as we can see their advantages in stark contrast to the service provided by a bank/processor.
What is an ISO ?
ISO stands for Independent Sales Organisation. Its a US imported term and is used for a reseller of credit/debit card processing facilities. Their ownership is independent of the card processors for whom they recruit customers (or merchants) but often they will recruit exclusively for one card processor. ISO’s are licensed/authorised by the card processor to resell its merchant accounts.
What do ISO’s do ?
An ISO will :
- Find and recruit customers.
- Assist customers with their merchant account application ensuring adequate information is provided and required “Know Your Customer” and “Anti-Money Laundering” documents are provided.
- Provide a card terminal (and support) to the merchant.
What does an ISO not do ?
An ISO does not :
- Process your transactions. These are processed by your card processor and are never seen by the ISO.
- Hold or have access to your settlement funds. These are remitted to you by your card processor and are never seen by the ISO.
- Provide support for individual card transactions or chargebacks. Your contract is directly with the card processor and they provide all helpdesk support directly.
6 reasons to use an ISO
- They are cheaper. Widely accepted industry benchmark is by about 40%. Why ? Because they know they are in a competitive market and their cost base is very low.
- You get exactly the same merchant account. Its not just similar, it is exactly the same as if you went to a bank/processor directly. Your contract for the merchant account is directly with the card processor.
- You get the same terminal models. Again, not just similar, but exactly the same. The whole UK card payment industry buys their terminals from a limited number of suppliers (click here)
- They are quicker to set you up. ISO’s are small, nimble organisations who’s entire revenue is dependent on getting merchants approved and accepting cards as quickly as possible. They are experienced in finding a way to cut through the administrative bureaucracy that slows down banks/processors
- They will do most of the work for you. ISO’s will fill out your paperwork and tell you exactly what documents to provide. All you need to do is review and sign a form. Banks/processors provide little assistance in completing their lengthy application forms
- They ‘insulate’ you against future fee increases – customer’s referred by an ISO are “ring-fenced” by the card processor. When it comes to across the board fee increases, your ISO will be consulted by the processor and will have some input as to whether or how much increase is passed to you. Generally, they are defensive of increases because the ISO takes a dis-proportionate amount of the risk (of you leaving) compared to the reward of the fee increase, which is largely taken by the processor.