What is a Merchant Services ISO/MSP?

Shaw Merchant Group
6 min readMar 16, 2024


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Merchant services have become an essential component of modern business operations, facilitating the smooth and secure processing of payments through various channels, including credit and debit cards. Merchant Services Independent Sales Organizations (ISOs) and Merchant Service Providers (MSPs) play a crucial role in the payment processing ecosystem, serving as intermediaries between merchants and financial institutions. In this comprehensive guide, we will explore what Merchant Services ISO/MSPs are, how they make money, the opportunities they offer for residual income, and what is required to start a merchant services business.

What is a Merchant Services ISO/MSP?

A Merchant Services ISO/MSP is a third-party entity that partners with acquiring banks or processors to offer payment processing services to merchants. ISOs and MSPs act as intermediaries between merchants, financial institutions, and payment networks, facilitating the authorization, settlement, and processing of credit and debit card transactions. ISOs typically focus on sales and marketing, acquiring new merchant accounts, while MSPs handle the back-end operations, customer service, and technical support.

Merchant Services ISOs and MSPs are responsible for providing merchants with the necessary equipment, software, and services to accept card payments in-store, online, or through mobile devices. They earn revenue through various sources, including transaction fees, monthly service fees, equipment leasing, and value-added services.

How do Payment Processors Make Money?

Payment processors, including ISOs and MSPs, generate revenue by charging merchants fees for processing card transactions. The primary sources of income for payment processors include:

1. Transaction Fees: Payment processors charge a small fee for each transaction processed on behalf of the merchant. This fee is typically a percentage of the transaction amount or a fixed amount per transaction.

2. Monthly Service Fees: Merchants are usually required to pay a monthly service fee for access to payment processing services, equipment, and support. This fee may vary depending on the volume of transactions processed by the merchant.

3. Equipment Leasing: Payment processors often lease or rent out payment terminals, POS systems, and related equipment to merchants for a monthly fee. This provides an additional source of revenue for the processor.

4. Value-Added Services: Payment processors may offer value-added services to merchants, such as fraud prevention tools, analytics, reporting, and integration services. These services are usually charged separately and can contribute to the processor’s overall revenue.

Merchant Services Agent Program and ISO Program

Merchant Services Agent Program:

Many payment processors offer merchant services agent programs to individuals or sales organizations interested in selling payment processing services to merchants. Agents are typically independent contractors who earn commissions based on the volume of transactions processed by the merchants they sign up. Agent programs provide training, marketing materials, and ongoing support to help agents succeed in the competitive payments industry.

How to Start Your Own Payment Processing Company

Merchant Services ISO Program:

ISOs are more advanced resellers of payment processing services, typically working with larger merchants or aggregating multiple smaller merchants under their umbrella. ISOs have the ability to set pricing, customize services, and manage their own portfolio of merchants. ISOs may also recruit and manage sub-agents to expand their sales reach and increase their revenue potential.

Starting a Credit Card Processing Company

Starting a credit card processing company can be a lucrative and rewarding venture for entrepreneurs with a passion for sales, technology, and financial services. To launch a successful merchant services business, you will need to consider the following key steps:

1. Business Plan: Develop a comprehensive business plan outlining your target market, pricing strategy, sales channels, marketing approach, and financial projections. A well-defined business plan will serve as a roadmap for your company’s growth and success.

2. Legal and Regulatory Compliance: Obtain the necessary licenses and certifications to operate as a payment processor in your jurisdiction. Ensure compliance with industry regulations, data security standards (such as PCI DSS), and anti-money laundering laws to protect your business and your clients.

3. Partnerships: Establish relationships with acquiring banks, processors, and payment networks to access the infrastructure and technology needed to process card transactions. Choose partners that offer competitive rates, reliable service, and robust security features to enhance your value proposition.

4. Sales and Marketing: Develop a sales strategy to attract merchants, generate leads, and close deals. Leverage digital marketing, networking events, referral programs, and cold calling to reach potential clients and showcase the benefits of your payment processing services.

5. Customer Service and Support: Provide exceptional customer service to merchants, offering technical assistance, troubleshooting, and timely responses to inquiries. Building strong relationships with your clients will help retain existing accounts and attract referrals from satisfied customers.

6. Technology and Innovation: Stay abreast of the latest developments in payment processing technology, including mobile payments, contactless transactions, and e-commerce solutions. Invest in cutting-edge software, hardware, and security protocols to offer merchants a seamless and secure payment experience.

7. Residual Income and Commissions: As a credit card processing company, you can earn residual income through ongoing transaction fees and service charges levied on merchant accounts. Agents and ISOs receive commissions based on the volume and value of transactions processed by the merchants they sign up. By building a large and loyal client base, you can generate a steady stream of passive income over time.

Selling Credit Card Processing and Merchant Services

Selling credit card processing and merchant services requires a combination of industry knowledge, sales skills, and relationship-building acumen. To succeed as a payment processing sales professional, consider the following best practices:

1. Understand the Market: Research the payment processing industry, including trends, competitors, pricing models, and customer needs. By staying informed about the latest developments in the field, you can position yourself as a trusted advisor to merchants seeking payment solutions.

2. Identify Target Customers: Define your target market based on industry verticals, business size, geographic location, and payment preferences. Tailor your sales pitch and value proposition to address the specific needs and pain points of your target customers.

3. Build a Strong Portfolio: Assemble a diverse portfolio of payment processing solutions, including credit card terminals, POS systems, e-commerce platforms, and mobile payment options. Offer customized packages and pricing plans to cater to the unique requirements of different merchants.

4. Leverage Referrals and Networks: Tap into your professional network, industry associations, and referral partners to generate leads and expand your client base. Develop relationships with key influencers, business owners, and decision-makers who can refer merchants to your services.

5. Provide Value-added Services: Differentiate yourself from the competition by offering value-added services such as fraud prevention tools, analytics, reporting, and integration support. By going the extra mile to meet the needs of your clients, you can build trust and loyalty over time.

6. Educate and Empower Clients: Educate merchants about the benefits of accepting card payments, including improved customer convenience, higher sales volumes, and reduced risk of fraud. Empower clients to make informed decisions about their payment processing needs and empower them with the tools and knowledge to succeed.

In conclusion, Merchant Services ISOs/MSPs play a vital role in the payment processing ecosystem, enabling merchants to accept card payments securely and efficiently. By understanding how payment processors make money, the opportunities for residual income, and the key steps to starting a merchant services business, entrepreneurs can capitalize on the growing demand for payment solutions in today’s digital economy. By leveraging partnerships, technology, sales skills, and customer service excellence, you can build a successful credit card processing company and help merchants thrive in an increasingly cashless world.



Shaw Merchant Group

At Shaw Merchant Group we specialize in merchant services agent and ISO development. We are a group of experienced payment processing industry professionals.