What Is an Independent Sales Organization ISO

An Independent Sales Organization (ISO) is a third-party company that has a direct relationship with acquiring banks and payment processors to provide merchant services, primarily for businesses that need to accept credit card and electronic payments. 

Unlike banks, ISOs don’t issue merchant accounts themselves, but they act as intermediaries, as they set up accounts, manage the application process, and deliver the technology, tools, and customer support that merchants need to process payments smoothly. 

Beyond simply onboarding merchants, ISOs can also offer value-added services such as fraud prevention tools, payment gateways, point-of-sale systems, and integration with accounting or e-commerce platforms. Because of their flexibility and specialized expertise, ISOs can create competitive pricing structures, provide faster approvals, and offer a more personalized approach compared to traditional financial institutions. 

For businesses, partnering with an ISO can mean lower costs, improved service, and access to modern payment technologies.

What Do ISOs Do for Businesses

Independent Sales Organizations (ISOs) act as a bridge between businesses and acquiring banks, helping merchants access the tools and services they need to accept and manage payments effectively. They go beyond simply setting up merchant accounts and offer tailored support, technology, and resources that make payment processing smoother and more cost-effective. Below are the main ways ISOs support businesses:

Provide Merchant Accounts

ISOs handle the application and approval process for merchant accounts, making it easier for businesses to start accepting credit and debit card payments.

Offer Payment Processing Solutions

They supply businesses with the infrastructure and technology to process transactions securely, whether online, in-store, or via mobile.

Supply Point-of-Sale (POS) Systems

Many ISOs provide POS systems and terminals, enabling businesses to manage sales, track inventory, and streamline operations.

Deliver Fraud Prevention Tools

ISOs equip merchants with tools to detect and reduce fraudulent activity, helping protect both revenue and customer trust.

Ensure Compliance with Payment Standards

They guide businesses in maintaining compliance with PCI DSS and other payment security requirements.

Provide Customer Support

Ongoing support is a key ISO function, helping merchants troubleshoot issues and optimize their payment systems.

Offer Value-Added Services

In addition to payment processing, ISOs may provide services like e-commerce integration, recurring billing, and reporting tools to improve financial management.

Who Can Become an ISO

An Independent Sales Organization (ISO) can be founded by individuals or companies with strong backgrounds in finance, sales, or payment processing who want to enter the merchant services industry. 

Typically, ISOs are started by entrepreneurs, payment consultants, or businesses already working in financial technology who see an opportunity to provide payment solutions to merchants. 

While almost anyone can pursue becoming an ISO, it requires meeting strict industry requirements, establishing a sponsorship with an acquiring bank, and building the infrastructure to manage merchants, compliance, and technology. The process is not simple, but with the right expertise, resources, and partnerships, it can be a profitable business model.

Here are the main steps to becoming an ISO:

• Research the Industry: Understand how payment processing works, including the roles of card networks, acquiring banks, and ISOs.
• Build a Business Plan: Define your target market, services, and revenue model.
• Register Your Business: Form a legal entity, obtain necessary licenses, and meet local business regulations.
• Secure Sponsorship from an Acquiring Bank: This is essential for offering merchant accounts and processing services.
• Meet Compliance Requirements: Ensure adherence to PCI DSS and card network regulations (Visa and Mastercard registration, for example).
• Establish Technology and Partnerships: Set up payment gateways, POS systems, and fraud prevention tools to support merchants.
• Develop a Sales and Marketing Strategy: Recruit sales agents, create outreach programs, and build relationships with merchants.
• Provide Customer Support Infrastructure: Implement systems for handling merchant issues, chargebacks, and ongoing service.

Types of Businesses that Should Work with ISOs

Independent Sales Organizations (ISOs) can be a great fit for businesses that need flexible, reliable, and cost-effective payment solutions. They’re especially useful for companies that process high volumes of transactions, operate in niche industries, or require tailored support beyond what traditional banks offer. Here are the main types of businesses that benefit from working with ISOs:

• Small and Medium-Sized Businesses (SMBs): Gain access to affordable merchant accounts, flexible pricing, and personalized service.
• E-commerce Stores: Rely on ISOs for secure online payment gateways, fraud detection, and recurring billing solutions.
• High-Risk Businesses: Industries like travel, gaming, CBD, or subscription services often face challenges with banks but can find support through ISOs.
• Retailers and Restaurants: Benefit from POS systems, terminals, and integrations that streamline in-store sales.
• Service-Based Businesses: From salons to repair shops, ISOs provide mobile payment options and recurring billing features.
• Healthcare Providers: Leverage ISOs for secure, HIPAA-compliant payment processing and flexible patient billing solutions.‍
• Nonprofits and Charities: Use ISOs to set up donation processing and recurring contribution systems with lower fees.