How to become an ISO

The world of payments is a fast moving one, there are new ISOs, PSP, ISVs and Fin-tech businesses popping up more often than ever before.

So, what really is involved in setting up a payments ISO. Let’s try and break it down for you so you can see the benefits and pitfalls of starting your own payments ISO – is it really as easy as it seems?

In short – No, let’s go into why.

To start a payments ISO you will need to find an acquiring bank that is prepared to give you an ISO contract (independent sales organisation) to resell their acquiring. There are lots of challenger acquirers entering the market at the moment that are prepared to offer “ referral” deals to resellers. This is a quick and easy way to get set up to start offering payments, there’s nothing wrong with these types of agreements.

However, the one difference being that as a referral partner the acquirer will not register you to the schemes, Visa and Mastercard as an official ISO of their acquiring, being an official ISO the acquirer is responsible for your behaviour, because of this you may have to go through Audits and regularity procedures throughout your tenure as an ISO to ensure you are acting as you should be.

Becoming an official ISO rather than a reseller under a referral agreement is a little harder to obtain, this is because the acquirer becomes more invested in you as a ISO, Its a joint up relationship that takes valuable resource from the acquirers side to nourish and develop, This is a contributor as to why you will find ISO contracts a little harder to come by than a referral deal as your acquirer will want something from you in return. Acquirers usually look for companies who have something a little different or a client base to offer the acquiring solution to, Or have a successful history as a reseller that they can demonstrate as a sub ISO or a reseller of acquiring in the past.

As well as having all of the correct contracts in place with the Acquirers that you wish to represent, you will need to get the relationships in place with a funding house so that you can lease your terminals to your clients and a trusted provider for all of your terminals and hardware that you wish to offer.

You will also need to invest in infrastructure to support your merchant base and customers/partners. This might look like a customer services, finance, applications, operations and sales department to start with.

The last thing you will need to consider is the logistics and the Helpdesk for your merchants, it is possible for you to outsource this but it all comes as an expense that needs to be considered, your partners and your merchants will want and need to be serviced at all times – this is a critical aspect.

Its a difficult position for anyone starting in payments to partner with the right acquiring offering, It might seem as though there is so many options available to you, however managing the expectations of all of these acquirers and ensuring you have the correct mix of appetite, hardware, USPs and just aligning yourself to an acquirer that has the same ethos as you is critical, It may prove a little overwhelming to do as a new entry into a busting sector.

The alternative option to getting started as an official ISO is to partner with an already registered ISO who represents the acquirer that you wish to promote, or sign up to one of the white label platforms that are available on the market today.

This is the space that Modern World Business Solutions are operating in, we have a very unique white label platform that enables you to start your own agnostic payments business by just having the one relationship with us.

We at Modern World hold all of the correct relationships with acquirers, product providers, finance houses and offer full support to you and your merchants through our modern offices in Cambridgeshire UK, We then have developed, in house a fully white labelled boarding platform that gives you as a seller of payments a fully holistic overview of your estate and opens up not only full reporting capabilities but an autonomous and transparent approach to selling payments.

Setting up your ISO from scratch will be a time consuming prospect, the ISO agreement alone whilst in legal can take up to 12 weeks to get a signature from both parties, that’s before you have everything else in place that you need to execute so please bare this in mind when you are planning to set up your own payments ISO. On the flip side of this, partnering with a company as a sub ISO or a reseller is a lot quicker and you can get the agreements signed and be up and selling within a few days of signing.

In short, we think we have developed the perfect tool for anyone that is looking to start their own ISO or payments business as a stepping stone, or even a seasoned professional that wants to open up more options to their customer base.

If starting an ISO the traditional way is not for you right now, then we would welcome a conversation to point you in the right direction on your payments journey and show you how a partnership with Modern World could be the perfect start for you.

Shall we weigh it up?