In the world of payment processing and merchant services, businesses encounter numerous players that help them handle electronic transactions efficiently. Among these players, Independent Sales Organizations, or ISOs, play a pivotal role.
In this Payment Nerds guide, we explore ISOs, how they differ from merchant service providers, the benefits and challenges they bring, and why payment processors may be a better choice for your business. Read on and learn everything you need to know about ISOs today.
What is an Independent Sales Organization (ISO)?
An Independent Sales Organization (ISO) is a third-party entity that works as an intermediary between merchants and payment processors. Essentially, ISOs sell payment processing services to businesses, enabling them to accept debit or credit card payments from their customers. ISOs are registered with major credit card networks, such as Visa and Mastercard, and often partner with acquiring banks to offer comprehensive merchant services[1].
Unlike banks or merchant account providers, ISOs specialize in tailoring payment solutions to meet the needs of a wide variety of businesses. They provide the infrastructure and expertise to facilitate electronic payments, including hardware, software, and ongoing support. ISOs bridge the gap between complex payment systems and the businesses that rely on them daily.
How ISOs Differ From Merchant Service Providers
Merchant service providers (MSPs) and ISOs are often confused as they operate within the same ecosystem. However, the two differ in several key ways.
First, MSPs are typically larger organizations, often directly affiliated with banks or acquiring institutions, offering various financial and payment-related services[2]. ISOs focus more narrowly on selling payment processing solutions and often rely on partnerships with MSPs for backend services.
Another difference is that ISOs are independent, as their name suggests. They don’t own the payment infrastructure but leverage third-party systems to deliver services to merchants. MSPs, on the other hand, often have direct control over it.
ISOs often excel in building personal relationships with merchants, offering tailored solutions and dedicated support. MSPs may have more standardized service offerings with less room for customization.
Despite these differences between ISOs and MSPs, Payments Nerds is an exceptional merchant service provider. We offer a range of physical and online merchant services, custom solutions, and transparent pricing, all while providing reliable and persistent payment processing.
Interested to learn more? Then apply for our services today and discover how Payment Nerds sets itself apart from the competition.
Kinds of Businesses That Work With ISOs
While any business can benefit from working with an ISO, certain business types find them particularly valuable. Here are some specific examples to help you consider:
- Startups: New businesses often lack the credit history or financial standing required by traditional banks, making ISOs a practical alternative.
- High-Risk Businesses: Industries like online gaming, travel agencies, and CBD sales benefit from the specialized solutions ISOs provide.
- Small and Medium Enterprises (SMEs): ISOs offer customized services that align well with the unique needs of SMEs, including affordable rates and tailored support.
- E-Commerce Stores: Online businesses need advanced payment solutions, such as recurring billing and fraud prevention, which many ISOs are well-equipped to offer.
Reasons Why Businesses Work With ISOs
Partnering with an ISO can bring several advantages to businesses, especially those looking for flexible, accessible, and supportive payment solutions. Here’s why many merchants choose to work with ISOs:
Stronger Chance of Acceptance
ISOs often have the ability to work with businesses considered high-risk by traditional banks or merchant service providers. Industries such as online gambling, subscription services, or nutraceuticals can face challenges in securing payment processing due to the perceived risk of chargebacks or fraud[3]. ISOs specialize in crafting solutions that cater to these industries, increasing the likelihood of approval for a merchant account.
More Flexible Payment Methods
In today’s diverse payment landscape, businesses must offer multiple ways for customers to pay. ISOs enable merchants to accept various payment methods, including credit cards, debit cards, mobile wallets, and even international payment options. This flexibility allows businesses to cater to a broader customer base and stay competitive[1].
Attentive Customer Support
For many small and medium-sized businesses, responsive and personalized customer support is a top priority. ISOs often provide dedicated account managers and round-the-clock assistance, ensuring merchants receive help when they need it most. This level of service can make a significant difference, especially during peak sales periods or when technical issues arise.

Downsides of An ISO
While ISOs provide many benefits, they aren’t without their drawbacks. Businesses should weigh the following considerations before deciding to work with an ISO:
Additional Costs
ISOs often act as intermediaries between merchants and acquiring banks, which can lead to several fees. Merchants may face higher transaction costs than working directly with a bank or MSP. These fees can include setup charges, monthly account fees, and per-transaction surcharges, which may add up over time.
Less Control Over Processing
Since ISOs rely on third-party payment processors, merchants may have less direct control over the processing environment[1]. Any issues with the processor, such as downtime or delays, can indirectly affect the merchant. This can be a significant disadvantage for businesses that prioritize stability and control.
Potential Price Gouging
Not all ISOs operate transparently, and some may take advantage of merchants by inflating fees or hiding costs in complicated pricing structures[3]. To avoid falling victim to price gouging, businesses should carefully review contracts, seek recommendations, and prioritize ISOs with a strong reputation for ethical practices.
Additional Considerations When Choosing an ISO
To make the most of an ISO partnership, businesses should consider the following factors:
- Reputation: Look for ISOs with positive reviews and a track record of success in your industry.
- Contract Terms: Ensure pricing, termination clauses, and additional fees are transparent.
- Technology: Evaluate the payment solutions and technology an ISO provides, including POS systems, payment gateways, and integrations with existing software.
- Security: Prioritize ISOs that comply with PCI DSS (Payment Card Industry Data Security Standard) and offer robust fraud prevention tools.
Why Your Business Should Partner With Payment Processors
When it comes to managing payment systems, many businesses face a crucial decision: work directly with a payment processor or partner with an Independent Sales Organization (ISO). While ISOs have their advantages, partnering with a trusted payment processor like Payment Nerds offers a more comprehensive, transparent, and efficient approach to merchant services.
Here’s why working directly with a payment processor can be a better choice for your business.

Transparent Pricing and Reduced Costs
One of the biggest drawbacks of working with ISOs is their tendency to layer fees onto the payment processing services they provide. ISOs act as middlemen, which can mean added costs for the merchant. When you partner directly with a payment processor like Payment Nerds, you avoid the markups that ISOs often impose.
Greater Control Over Your Payment Ecosystem
Partnering with an ISO often means giving up some control over your payment systems. ISOs act as intermediaries, which can lead to slower issue resolution and limited customization. When you work directly with a payment processor, you retain complete control over your payment environment.
This means faster response times for technical issues, direct involvement in system configurations, and the ability to implement custom solutions that align with your unique business needs.
Superior Customer Support
ISOs are known for offering personalized service, but their reliance on third-party processors limits their ability to resolve issues. In contrast, payment processors provide direct support from the team that manages your account and technology. This eliminates the back-and-forth communication and ensures your issues are resolved quickly and efficiently.
With 24/7 customer support, dedicated account managers, and expert teams, Payment Nerds delivers a level of service that ISOs simply can’t match.
Seamless Scalability for Growing Businesses
As your business expands, your payment processing needs will evolve. Many merchant service providers and payment processors are prepared to handle this growth seamlessly. Whether you’re scaling up transaction volumes, expanding into new markets, or adding new payment methods, a direct partnership with a payment processor ensures your systems grow with you.
Enhanced Security and Compliance
ISOs depend on their partnered processors for PCI compliance and security measures. When you work directly with a payment processor, you’re more likely to benefit from the most robust security protocols available.
Payment processors like Payment Nerds ensure that all transactions meet stringent PCI-DSS (Payment Card Industry Data Security Standard) requirements, safeguarding your customers’ sensitive data.
Conclusion
Independent Sales Organizations play an essential role in the payment processing ecosystem, offering tailored solutions, increased flexibility, and attentive support to businesses of all sizes. However, merchants should carefully weigh the potential drawbacks to determine whether partnering with an ISO is the right choice for their business.
If you’re exploring your options, consider reaching out to Payment Nerds. We are a reputable merchant service provider that offers a broad range of solutions, transparent pricing, and so much more. Apply with us or reach out today to discuss how we can help your business thrive in today’s competitive market.
Sources
- LinkedIn. “Value of an Independent Sales Organization.” https://www.linkedin.com/pulse/value-independent-sales-organization-rick-cochran-5watc/. Accessed on December 19, 2024.
- Bankrate. “Merchant services 101: A complete guide.” https://www.bankrate.com/credit-cards/business/merchant-services-a-complete-guide/. Accessed on December 19, 2024.
- Encyclopedia.com. “Independent Sales Organization (ISO).” https://www.encyclopedia.com/economics/encyclopedias-almanacs-transcripts-and-maps/independent-sales-organization-iso. Accessed on December 19, 2024.