An Independent Sales Organization (ISO) is a third-party company authorized to resell merchant acquiring services on behalf of an acquirer or payment processor. ISOs serve as intermediaries, helping merchants sign up for payment processing solutions often under their own brand while the actual processing and settlement is handled by a backend acquiring bank.

ISOs are not acquiring banks themselves, but they are often the first point of contact for merchants seeking to accept card payments. Many ISOs offer localized outreach, onboarding support, customer service, and relationship management, acting as an extension of the acquirer's sales and service operations.

Key Characteristics of ISOs:

• Must be registered with the card networks and typically sponsored by a licensed acquirer
  
• May market payment services under their own brand, but the merchant accounts are ultimately backed by the sponsoring acquirer
  
• Often earn a portion of the processing fees generated by their merchant portfolio
  
• Can provide technical integration, billing support, and merchant education

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Risk and Compliance Considerations:

• The acquirer retains legal and financial responsibility for underwriting, compliance, and transaction risk—even when merchants are brought in by an ISO
  
• Some acquirers may delegate certain onboarding functions to trusted ISOs under defined risk policies
  
• ISOs are expected to identify high-risk merchants and report them accurately to the acquirer during application
  
• Improper disclosure or oversight by an ISO can lead to regulatory issues, brand damage, or fines if prohibited or non-compliant merchants are onboarded

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ISOs are required to use specific disclosures and branding language (such as “Member Service Provider”) in alignment with card network requirements and must operate within clearly defined legal and operational frameworks.

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In summary, an Independent Sales Organization expands the reach of acquirers by sourcing and supporting merchant accounts but also introduces risk that must be carefully monitored through strong oversight, training, and compliance controls.

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