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The benefits of working directly with an established merchant processor over an ISO

In order for your business to accept cards and other non-cash forms of payment, you need a partner to process them. In other words, you need an organization that is a member of the Visa® or MasterCard® credit card associations.

Member banks have long histories as card processors, serving as the link between you and card issuers and networks. Many banks also provide the startup and ancillary customer support services you need to set up your card acceptance system, process transactions efficiently and troubleshoot any day-to-day issues that arise.

Some banks, however, choose to outsource these services to third-party companies known by many in the industry as independent sales organizations (ISOs).

ISOs are businesses that sell card processing services independently. Most will contract with individual agents who may represent a number of different ISOs.

As middlemen, ISOs focus primarily on soliciting new customers. Actual card processing is performed by the banks or other financial institutions that ISOs contract with on their customers’ behalf.

Depending on the fine print in the contractual agreement between an ISO and a bank, the ISO may have other responsibilities. In addition to offering a plan that addresses card processing rates, it may help you decide which credit, debit or contactless payment methods to accept, or what point-of-sale systems to lease or purchase. It may also serve as a customer service contact for your customers that pay you with card, including those who wish to dispute charges or have other card-related issues.

All of these are important functions that are critical to your satisfaction with your card processing services.

The question you might ask yourself is this: who is better-equipped to provide these services: a third-party sales company whose agents may serve multiple banks and may outsource some or all non-sales-related activities to other vendors, or an established bank that offers all these services in-house, integrating them with card processing activities?

Let’s take a closer look at customer support, for example. An ISO might woo you with an offer of lower transaction costs. But a closer look might show that the offer also includes no-frills service, which is only a bargain if you never need customer support.

The reality is, card terminals and point-of-sale systems sometimes malfunction. Online purchases may trigger questions 24/7. System downtime can translate into lost revenue.

You and your customers may be better served by working with customer service representatives who are part of the bank that is performing your processing activities. Established banks may also have the resources to invest in the latest security features and offer suggestions for features and options that cater to your customers’ buying patterns.

The bottom line: Do your homework before choosing an ISO over a full-service bank for card processing. Look for a good value, which includes reasonable cost, options that address your needs, strong security and excellent customer support.

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