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Tuesday, April 11 2017
Are you considering becoming a registered ISO?

Are you considering becoming a registered ISO? This can really bring you to the next level when it comes to expanding your credit card processing business, but it can be quite a journey to get there. As a registered ISO, you can have sub-agents and have more control over your business, but you have to go through the work of finding a large ISO or a sponsoring processor that will take you on. In addition, you need to also be registered with Visa and Mastercard, which is not cheap and requires hours of bureaucratic maneuvering.

The rewards can often be well worth it, though. If you are a registered ISO, you have more freedom and more income potential. These high upfront fees may be in the tens of thousands, but you can probably recover your costs in very little time if you have structured your business correctly.

 As a registered ISO, you can charge less for credit card processing, so you keep more of the cut without a middle man. You have more power because you have a more direct relationship with the credit card companies. You can control your pricing a lot more, you can negotiate your rates more easily, and you will have better options when it comes to residuals.

Best of all, you can build your own brand which is what will ultimately lead to the big bucks. Having your own brand is more secure as well, and you have the freedom to tweak more aspects of your business.


How Do You Apply?

There are a few different steps that you have to go through before becoming a registered ISO. In short, it basically involves:


1 – Finding a company that you can resell for. This is a critical choice that can affect your business for a long time.

 2 – Go through the registration process. This can be long and involve a lot of paperwork, so it requires a lot of patience, but it can be worth it.

3 – Pay the cost of the registration fee. You need to have enough capital to do this in the first place.

4 – Follow the rules. You can lose your privileges if you don’t keep on the good side of the credit card companies.


Now that you have a general idea, let’s go over these steps in detail:


Finding a Company that You Can Resell For

Like any other business partnership, you have to be picky with who you are going to work with. Choosing the wrong company can sabotage you in the long run, so it’s extremely important to do your research here. You need a company that has a good reputation, that has been around for awhile, and that pays their ISO’s consistently. You also want to make sure that they offer options that are in line with the long-term vision and business model of your company.

Since you’re going to be investing so much money in this, invest a little bit of time up front. Ask around. Network with other registered ISO’s and see what they have to say. Go online and research the history of every company that you’re considering before you come up with a decision.

Also keep in mind your chances of getting accepted by the company. Find out if they even accept your kind of business. Some of them won’t consider “high risk” ventures like ecommerce or any businesses that deal in the “vices,” so if any of your future clients are in this niche, you may want to look elsewhere.


Go Through the Registration Process

Now it’s time to be scrutinized. You will have to go through a registration process that can take up to six months. Your history as a business as well as a consumer will be considered. Applying with Visa and Mastercard takes a long time and can cost you quite a bit. Since this business is all about risk, they will look at your financial situation, your credit, your criminal record, your assets, any civil disputes, and so on.

Should any issues arise, the credit card companies will use your sponsor as a middle man in their communications, so this can be really slow. From there, your sponsor will ask you to explain yourself. There can be a lot of back and forth until you’re finally approved.


Pay the Registration Fee

Before you even get started, save your capital, because registering will cost you. It will be roughly $10,000 for that first year, and then $5,000 every year after that. Make sure that your business is healthy and that you are making enough to afford all of these fees.

This may seem like a lot, but if you are able to be a registered ISO it can really pay for itself. If your future clients are high volume in particular, you can save lots of money on fees without having to raise your prices. You also will often have the freedom to offer more options.


Follow the Rules

You don’t want to spend months of your precious time and tens of thousands getting approved if you’re just going to ignore regulations and lose your sponsorship—or, worse, get sued. Make sure to learn all of the standards that are expected of you and to follow them carefully. Comply with all ISO regulations. For example, don’t take current clients and try to move them over to the new sponsor, as this is a recipe for getting into trouble. You could get sued or lose your hard-earned residual income streams. Do everything by the book and honor all your past agreements.

If you’re not sure about something, then don’t hesitate to get in touch with a lawyer that specializes in law relating to ISO’s. With so much bureaucratic minutia to deal with, a good attorney can be worth his weight in gold and save you tons of money in the long run.


Becoming a registered ISO isn’t exactly easy and takes a substantial time and money investment, but it can be well worth it if you’re looking to expand your business.

Posted by: Scott Shaw AT 08:00 am   |  Permalink   |  0 Comments  |  Email

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Independent sales office of Total Merchant Services: Total Merchant Services is a registered ISO/MSP of Wells Fargo Bank, N.A., Concord, CA