How ISO Payments Can Help You Grow Your Business
For any type of business, getting paid is vital. But your customers no longer need to pay you in cash or with a check. There are several ways to accept payment, whether it’s via a debit card, a credit card, or another payment solution, like B2B buy now pay later.
Regardless of which payment option your customers choose to use, your small business will benefit from working with an ISO payments processor. ISOs, or independent sales organizations, are third-party companies that work with merchants to help them get paid through credit card payments or other types of electronic payment systems.
While ISO payments can get very technical, they play a key role in helping your small business receive real-time payments so you don’t need to rely on other forms of financing, like a merchant cash advance, to keep your company afloat.
In this guide, we’ll cover everything you need to know about ISO payments, the services ISO’s provide, and tips for how to choose the best ISO for your business needs.
How ISO Payments Work
ISOs — sometimes called member service providers (MSPs) — play a key role in the payments industry. These merchant service providers are not part of a card association, like Visa or Mastercard, meaning that they don’t license bank cards or provide operational functions.
Instead, ISOs have a relationship with acquiring banks (a financial institution that processes credit and debit cards) and merchant banks. This means they are able to talk between the credit issuers and the merchant account, which is where the money from a business transaction goes before it hits your business account.
Essentially, ISO payments streamline the transaction process by securely transmitting payment data from the merchant to the payment processor, which then authorizes and completes the transaction.
While it might seem odd to work with a middleman instead of working directly with a large bank, ISOs are able to provide small businesses with more flexibility and better customer service.
By partnering with ISOs, small businesses gain access to payment processing services and infrastructure, including point-of-sale terminals and online payment gateways.
How ISO Companies Can Support Your Business
ISO companies provide several services for businesses. They are able to handle the complex and technical side of payment processing, so small businesses don’t have to.
While ISOs primarily help process credit cards, they can also set up hardware and software, such as terminals and POS systems. Plus, they’re able to help your business with the set up of payment gateways, which allows both in-person and online companies to accept and process payment methods securely.
Here are some of the other ways that ISOs support small businesses.
Improve Cash Flow
Working with an ISO company speeds up credit card processing, so you’re able to get money in your business account faster. This in turn can help improve cash flow management and streamline the payment process.
Implementing an ISO system can also boost the efficiency of your operations, as everything is in one place. This helps minimize errors from having multiple payment operations, which in turn helps reduce waste and saves your company time. And saving time means saving money, which can also positively impact your cash flow.
Boost Customer Satisfaction
ISO companies focus on delivering high-quality products or services. Plus, they often have dedicated customer support, so you can get all of your payment questions or issues addressed quickly.
Not only will you benefit from a high-level customer service experience, but it will trickle down to your customers—boosting their satisfaction. This in turn can lead to customer loyalty and repeat business, improving your bottom line.
Gain Access to New Markets
Usually, ISO companies partner with a few different acquirers and payment processors, which helps your business offer more payment options to your customers. This adds more flexibility than working directly with acquiring banks.
It can also widen your customer base by offering various payment options, so those who prefer one type of payment over another can use the method that works best for them.
Another way your company can be opened to new markets is by serving both an ecommerce customer base as well as in-person customers at physical locations. An ISO can help you get what you need for both shopping experiences.
Tips for Choosing the Right ISO Payment Processor
Finding the right ISO provider can help you reach the right customers and get your payments faster. However, not all ISO payment companies offer the same perks and tech. When choosing which ISO partner to work with, here are some of the things you should consider.
Types of Hardware and Software
While some companies may use third-party hardware, others will have their own that they create. Depending on your business needs, ask about all the hardware options available. Whether you need mobile terminals or registers, the ISO provider should be able to give you the tools that are best for your business.
The same goes for software. You want to make sure that your online checkout process is as seamless as possible. Make sure that the ISO company offers an easy-to-use process that is not restrictive for you or your customers.
Payment Methods Supported
When deciding on which ISO payment provider to go with, find out which types of payment methods they support. While they should be able to handle credit card payments with no issue, see what other payment options are available. Things like buy now pay later and ACH transfers can increase payment options for your customers.
Choose an ISO provider that has the most widely available payment methods that fit the needs of your customers.
Value-Added Services
Check to see what other types of services the ISO provides. Besides hardware, software, and payment processing, what type of customer service do they have? Do they have extra perks to help make your small business a success? Can they help with your embedded payments system?
Loyalty Programs
One way to grow your business is to offer loyalty programs and gift cards. In fact, you can grow your revenue by 15% to 25% from customers who are in a loyalty program, according to a report from research firm McKinsey.
While a simple way to offer a loyalty program is with a punch card, they can be difficult to supervise, and it’s easy for customers to lose their cards. Find out if the ISO provider can integrate your loyalty programs into your POS system. This way customers can automatically earn points with every purchase and easily apply any discounts or offers they’ve earned.
Pricing
ISOs make money by selling software and hardware. They also charge a percentage of the transaction that is processed. Before agreeing to work with an ISO, check their pricing and fees. Compare prices between providers to make sure you are getting the best deal.
Add Financing Options to Your Business With ISO Payments
ISOs play an important role in business financing. By acting as the middleman between acquiring banks and merchants, they are able to help facilitate payments for small businesses. ISOs can provide payment hardware like registers as well as software to integrate various payment methods online. They also provide more flexibility and can increase cash flow by allowing a broader range of payment options.
Are you an ISO looking to offer your customers more financing options? Backd partners with ISO providers by offering customized financing solutions as well as advisory services for ISO integration.
