Weigh your options against your business goals for the best way to provide clients with merchant services.
The business of selling merchant services is getting a lot of attention. People are drawn to the flexibility of this industry and appreciate the career opportunities that come with serving their community’s small businesses, particularly with predictions that up to 17 million new companies will launch in 2022. Moreover, existing businesses are looking for new services to meet consumer expectations for omnichannel payments.
But there are different approaches to carving out a niche in the sector. One important decision you need to make is whether you’ll register as a merchant services ISO or white-label credit card processing from a partner. Here’s what you need to know.
What it takes to be a Registered merchant services ISO.
Though they operate in the same industry, Registered ISOs aren’t synonymous with businesses that white-label credit card processing. That’s because Registered ISOs can be a single person or a group operating as an organization that sells payments technologies and anything related to clients of the biggest credit card networks, Visa and Mastercard. Registered ISOs recruit merchants, train them, and manage sales, customer service, and other crucial activities at the point of sale.
To get started, prospective merchant services ISOs need to gather quite a bit of documentation to hurdle the application process. Beyond showing your business plan and marketing materials, you’ll need to provide tax returns or similar business financial statements for your company’s leaders. That’s on top of a snapshot of each principal’s personal financial resources as well. The process also requires you to list all of your ISO’s employees or associated agents. Last but not least, expect to show papers detailing that your business is a legitimate operation that’s officially been incorporated.
Additionally, becoming a bona fide Registered merchant services ISO requires you to flash some cash upfront. Both Visa and Mastercard charge $5,000 to register with their networks, so if you’re applying to both, you should be ready to shell out $10,000 just to get started. After that, you’ll have to pay $5,000 every year to stay in good standing.
Another option: An Agent “Doing Business As.”
You have another option to provide merchants with the payment services they need while building your own brand. Many professionals have found success by offering payment services on the foundation of a partner’s payment technology. This white labeling approach, which makes you an “agent doing business as,” offers the benefit of using a proven, established solution but lets your clients know that you’re their point person rather than a nameless, faceless tech giant that can’t match the high-touch customer service you’ll provide.
An even bigger perk is that the DBA roadmap to white labeling credit card services is a more streamlined affair than jumping through the many hoops needed to become a merchants services ISO. You don’t have to worry about nailing the convoluted registration process and forking over thousands of dollars in registration fees before you can even start doing business. And the best part is that over time, you’ll begin to build a name for yourself as an expert in payments and any other solutions you white label.
What’s right for you?
Both becoming a Registered ISO or DBA are viable options, but only you know the goals you’ve set for your business and which will help you reach them. Before you decide one way or another, draw up a pros and cons list and carefully consider what you stand to gain in either scenario. If providing merchant services, strengthening your brand, and putting your name out there as a payments go-to are your biggest priorities, then going the DBA route might be the best course for your business.
Contact the experts at NAB to learn more today and get started meeting the growing needs for payment services.
