ISO Payment Processing: The Advantages and How to Choose a Provider
The popularity of cash and checks is declining, being gradually overtaken by card payments, bank transfers, and buy now, pay later. Rather than setting up a direct account with a merchant services provider in order to offer more modern payment options, small businesses can choose to partner with an ISO payment processing service instead.
ISOs (or independent sales organizations) may save you money, can set you up faster, and expand the number of payment options you accept. For example, as well as debit and credit cards, you could accept wire transfers, digital wallets, and gift cards.
Read on to find out what ISOs are, the nine main reasons businesses use an ISO, and how to select the right provider for your business.
What Are Independent Sales Organizations?
Independent sales organizations are third parties that work as a go-between for financial services companies and small businesses. Essentially, they handle all the details of credit card processing and other financial solutions on behalf of small businesses.
On the financial services side, registered ISOs will work with companies like:
Card networks: Card brands like Mastercard and Visa
Acquiring member banks: Financial institutions that process credit and debit card transactions for businesses, such as Chase or Wells Fargo
Payment gateways: Online services that authorize and process electronic payments, like Stripe
Merchant service providers: Companies that provide businesses with the tools and services needed to accept debit card and credit card payments, such as Square or Clover
Having an ISO partner saves a small business owner from having to manage accounts and relationships with all these different levels of the payment processing ecosystem. Instead, you can have an expert in your corner handling the nitty-gritty so you can focus on your business.
ISOs can also have relationships with other financial services companies aside from the ones listed above that allow them to offer other value-added services. For example, When ISOs partner with Backd, they can give their customers access to quick, flexible financing solutions, like working capital advances or business lines of credit.
9 Advantages of ISO Payment Processing
Let’s look at the nine main reasons you may choose to work with an intermediary like an ISO.
1. Customized Payment Solutions
ISOs can customize a payment processing solution to meet your exact business needs. For example, they can set you up with:
An online payment gateway for your e-commerce site
A POS system for in-store payments
Mobile devices for processing transactions at trade shows and markets away from your premises
Whatever configuration you need to take payments, they can design a solution and set it up for you. They can also help you streamline payment processing across your business by connecting the software to the apps your business already uses to improve efficiency.
More advanced payment industry solutions, like loyalty programs and gift cards, are available through ISOs as well. This flexibility allows you to not only compete against larger firms but also improve the lifetime value of each customer.
2. Multiple Payment Options
You can access the wider ecosystem of payment methods through an ISO, meaning you can take payment by:
Credit cards
Debit cards
Automated Clearing House (ACH) transfers
Mobile payments
Online payment links on invoices
Gift cards
eCash
Many ISOs also allow firms to set up recurring payment systems, ideal for companies that offer subscription-based services.
By accepting a wider range of payment types from customers, you remove a key pain point — barrier to payment — and improve the customer experience. It also might result in customers settling their invoices faster.
3. Valuable Extra Services
ISO payment processing providers often offer a range of additional services including:
Chargeback management: Chargebacks are when a debit or credit card company refunds a completed transaction that a customer disputes. They are hard to manage for SMBs, and the additional transaction fees you pay are expensive. Many ISOs will manage each chargeback on your behalf to save you time and money.
Fraud prevention tools: ISOs work with customers to spot unusual activity before they cause a problem. This saves you money in the long run and minimizes your fraud risk.
Business lending: At times, you may need to take out equipment financing to increase production levels or open a business line of credit to pay for inventory. Many ISOs offer access to extra capital via small business loans and merchant cash advances, meaning you can often get the funds you need faster than going to your bank.
4. Fast, Easy Setup
ISOs manage the entire process of setting up your merchant account. They handle your application through the underwriting stage.
The close working relationships ISO payment processing providers have with financial institutions like acquiring banks in their network means that they can get your account set up a lot faster.
5. Excellent Customer Support
ISOs provide a more personalized level of customer service than larger financial institutions. That’s because their core customers are small and medium-sized businesses.
Most have support teams and account managers who are always available to help with any issues or questions you have. Many also assist with the onboarding process so you can get up and running quickly.
6. Assured Compliance
Key industry regulations like PCI-DSS are difficult to adhere to and can stop small businesses from setting up online stores and card processing systems.
The payment processing services ISOs provide have compliance built in, so you keep your important customer information safe, reduce the risk of fraud and data breaches, and avoid fines for not abiding by the regulations.
7. In-Depth Reporting and Analytics
The software provided by an ISO payment processing provider may include built-in apps that allow you to track sales performance and transactions.
This information gives small businesses useful insights into payment trends and customer behavior. You can use this to predict future sales and earnings trends, find out which products or services make the most money, and discover which payment methods customers prefer.
Many ISO software packages also can connect to your other apps, like your CRM, inventory management, and dispatching tools. These integrations mean that your sales and customer data is consistent and up-to-date.
8. Competitive Pricing
ISOs often offer more competitive pricing than traditional financial institutions.
Because they introduce volume business to payment processors and financial partners, they get better rates and pass the savings on to you. This means that SMBs can access payment processing rates that usually only larger companies can access.
9. Pricing Transparency
In addition to their competitive pricing, the charging structures of ISO payment processing providers are transparent with no hidden fees.
You should receive full details of their charges — like registration fees — upfront so you can see whether they fit within your budget or not. This makes it much easier for small business owners to avoid unexpected charges.
How to Choose the Right ISO Partner for Your Business
Finding the right ISO partner is key to making sure you can take payments easily and affordably from your customers.
Here are the steps to take to choose the right provider for your business:
Know what you want: Discover the range of payment methods offered by other firms in your sector to see if you match up. Think about ways you can go above and beyond what your competitors offer. Consider extras like loyalty programs and gift cards.
Research potential ISOs: Search for ISO payment processing providers online to find which ones offer the payment methods and extra services you want. Look for ISOs that have a wide range of financial institution partnerships and prioritize those with positive customer reviews.
Contact shortlisted ISOs: Once you’ve shortlisted the most suitable vendors, get in touch with their sales teams and inquire about their range of services, how their software integrates with other business apps, and how they guarantee compliance. Ask when their customer service team is open too, how you get in touch with them, and how quickly they respond.
Request a demo: Ask each ISO payment processing provider to demonstrate their software in real-time, especially the features you value the most. Pay attention to how user-friendly their software is and how much training your staff might need to use the system.
Get a firm quote: Request a detailed, written quote that shows all the setup fees, monthly charges, and transaction rates. It may also be a good idea to get your lawyer to look over the terms and conditions to make sure there are no hidden fees or long-term commitments that might cost you more in the long run.
Partner With Backd for More Value-Added Services
Working with an ISO can make running your business easier. As well as setting you up with the types of payments you want to accept, they also assist you with the hardware and software you need to take payments in-store, online, and on the go.
Business owners and ISOs alike can work with Backd for even more flexible financial services, including working capital advances, business lines of credit, and B2B buy now pay later.
