What is an Independent Sales Organization (ISO)?
Independent Sales Organization (aka ISO) is a term used within the payment industry to identify a individual or organization that is not an Association (Visa & MasterCard) Member. However, ISO’s have bank card relationships with an Association Member (banks) who participate in issuing or acquiring functions.
What is an MSP?
ISO’s can also be referred to ask Member Service Providers (MSP), this terminology most commonly differs between the card associations. MasterCard defines MSP as follows:
“a Member Service Provider as "a non-member that is registered by the Corporation [MasterCard] as an MSP to provide Program Services to a member, or any member that is required to register, in the Corporation’s sole discretion, and has been registered as an MSP to provide Third Party Processor Program Services to another member”
Each acquirer must register each ISO/MSP with the appropriate Association.
What are the ISO’s / MSP’s relations with member banks?
It is important to understand that ISOs and MSPs are not banks and the actual handling of the merchants’ money is done by the processing bank that has contracted with the ISO. Each ISO / MSP must be sponsored by such a processing bank, member of Visa and / or MasterCard, in order to be registered by either Credit Card Association.
Typically, processing banks are members of both Associations and the registration process for each Association is done simultaneously. An ISO / MSP can be sponsored by multiple member banks.
How can you tell if a company is a registered ISO/MSP?
Each ISO & MSP must display the name and location of their sponsor bank on their website and marketing material. This is most often disclosed in the footer of a company’s website.
How are ISOs / MSPs registered with Visa and MasterCard?
The registration process to become an ISO/MSP is rigorous and required the potential ISO/MSP to prove they are financially capable of performing the required duties. The documents applicants must submit with their application include:
• Two years business financial statements or personal tax returns (last 2 tax years) for all principals
• Personal financial statement for each principal
• Executed Articles of Incorporation / Partnership documents
• Detailed business plan
• Copy of sales materials / solicitations
• Complete list of current ISO employees / agents
Additionally, all principals have their credit history checked and evaluated to ensure that they are responsible with credit.
What are registration Fees?
Upon approval, the applicants must pay registration fees of $5,000 for each Credit Card Association. Every year thereafter, ISOs / MSPs have their registration reviewed and additional fees of $2,500 per Association are due upon approval.
What are agents? (MLS - Merchant Level Salespeople)
Agents are just that, they are agents or sales people (known as Merchant Level Salespeople [MLS]) and are used by almost every ISO/MSP to bring in new merchants. Agents are only allowed to advertise as representatives as the company they are an agent for.