How to pick an ISO
I am trying to find an ISO that I can be a reseller for, so I can find local merchants in my city that need credit card processing and resell the ISO's processing to them. The problem is that hundreds of ISOs all say they have the greatest reseller program. How can I figure out which is really the best?
One company is saying I would get 95 percent of the revenue, but I find this hard to believe. I don't see how they could make any profit if they keep just 5 percent. It sounds too good to be true. However, the company is among the fastest growing, according to Inc. magazine.
Could you please give me any advice on how to find the best ISO reseller program?
David J. Potter
Merchant level salesperson
We referred your question to Andy Meadows and Kevin Jones who are, respectively, Vice President, Sales, and President of SignaPay Ltd. They also both belong to The Green Sheet Inc. Advisory Board. Here's what they had to say.
Offers that sound too good to be true may very well be. Many companies advertise high revenue shares and/or big upfront signing bonuses, but you need to consider a number of key points when it comes to the financial side of those relationships:
What are they sharing revenue on? Many companies exclude a multitude of line items from their revenue shares (for example, PCI annual fees and government regulatory fees). Hence, you have to sell your merchants on these costs, but you're not benefiting in the revenue they generate.
If you incur high transaction costs, high basis points on processing volume, and/or numerous recurring monthly fees on your agreement, then you're only sharing in revenue after you've covered that cost. With this, 95 percent of "a little" simply isn't that much.
Are they offering lifetime residuals? And what are the conditions they stipulate in order to keep receiving your lifetime residuals. More so, have you researched the reputation of the company to ensure that they honor the agreement to pay your residuals?
Be cautious of signing bonuses. They may offer instant income, but you compromise the amount of revenue share you receive. This, in turn, reduces the overall value of your portfolio in the long run. In essence, you're mortgaging the future value of your portfolio for quick cash.
Merchant retention is a key to building and maintaining a profitable residual income. What is the company's background with merchant level customer service? How do they handle rate increases? Do you have any say in those increases? If the company "fees your merchants to death," you may find yourself in a monthly struggle to out-sign your merchant attrition.
Furthermore, consider the type of partnership you need to be successful. Most companies promise the world when it comes to service and support, but will they deliver? Again, research their reputation.
Will the company provide you an all-inclusive, back-office infrastructure that supports your daily sales efforts? Things like statement analysis, pricing strategies, POS equipment options and marketing collateral all are critical to your ability to sign merchants.
Key departments like application processing, underwriting and risk management can either slow you down - or add to your efficiency. Will you have an open line of communication with these teams and their management staff, or will you feel like you're on the outside looking in?
What tools will you have access to? Online account boarding and residual reporting, e-signature applications, mobile processing solutions, and Europay/MasterCard/Visa capability are just a few of the tools you need.
Will you receive ongoing training and education to improve your sales strategies and keep you up to date on industry trends? Knowledge is power; you need a company that is committed to your ongoing development.
Don't be so fixated on high revenue shares and big signing bonuses that you forget to look at the whole relationship. The devil is in the details.
Thank you, Andy and Kevin, for your thorough, insightful response. And best of luck to you, David, in finding an ISO that is just right for your long-term success in the payments industry.
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