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Shaw Merchant Group
Monday, December 07 2020
Merchant Services Agent ISO Agreements | How to Guide

Becoming a merchant services agent or an ISO is a major step, so it's important that you know the various pitfalls that you might face when working with credit card processing companies as an agent. Especially if you're relatively new to the business, you should keep alert that you don't give in to agreements that could crumble your business prospects over the longterm. Here are some major factors that you will want to consider when signing contracts:

Don't Take on Liability - Unless you are already a large and experienced company that can bear the brunt of this kind of risk, don't allow yourself to make agreements that hold you liable for losses. As an MLS, this holds even more true. Don't take on more responsibility than you have the cash reserves to manage, or you may find your capital or residuals drying up.

It's fairly typical nowadays for programs to not require you to take on liability, so there's no reason for you to attempt this if you don't have the means. Make sure to watch out for the fine print, though, and examine the contract for any statements that imply any conditions where an credit card processing ISO would have to take responsibility for any loss.

Make Sure You Are Paid Your Residuals Frequently - Don't deal with a processor that won't send you your residuals on time, every time. If you sell an account, you should receive your cut as soon as possible in accordance with the payment schedule, and you shouldn't have to face a waiting period to receive those funds.

Another thing to avoid are minimum payment thresholds. For instance, you may have to wait until your residuals have accumulated to a certain amount before you are paid. Yes, this helps to cut costs somewhat for the processor, but this is the money that is going to be flowing through your business, so you are going to need it in a timely manner. You are owed what you are owed, and you should receive it regardless of how much or how little it is.

Make Sure You Own Your Residuals - If you can't transfer or sell your residual income, you don't really own it. The bank or processor might own the merchant account, but you should own the residuals. These residuals are the lifeblood of your business, and without them, you won't have an asset that keeps paying you even when things slow down or you decide to leave the industry. Ideally, you should be able to sell them, keep them, use them as collateral for loans, or even pass them off as an inheritance. They should function like any other investment.

This issue can become especially dire if you find that you are unable to work or you pass into the next life unexpectedly. In such a case, you will need to be able to transfer that residual stream to new bank accounts.

Make Sure Your Agreement Isn't Exclusive - If you allow yourself to be taken in by a contract that demands your exclusivity, especially if you are new to the industry, then you have just entered an unhappy marriage of sorts. It might not be that you even dislike the processor that you're working with, but you are at a disadvantage if you can't see what else is out there. You never know when you'll be able to find a better deal or a more flexible company to work with. It's perfectly fine to have multiple relationships with many companies before you settle down with your favorite, and an exclusivity deal is going to hinder that, so make sure that you look over the contract closely.

Be Sure That Your Can Sell Your Residuals to Someone Other Than Your Processor - Again, if you can't sell your residuals or transfer them to someone else, you don't really own them. However, some processors have clauses in their contacts that compel you to sell your merchant account residuals only to them. This is obviously problematic if your processor isn't in the mood to buy.

Now, it's not out of the question if your processor demands the right to give you an offer before anyone else. Just make certain that aside from this, you can sell your residuals.

Think of the Future - Remember that companies always change, so you're probably going to want to consider a few things before you make an agreement. Where is this company headed? Are they likely to go through a merger or are they likely to be bought out by another company in the near future? This could potentially affect your residual income, so it's important.

Make sure that the agreement you make protects your residuals. If circumstances change, there are a few things that you can do, such as taking a buyout from your processor, taking one from a third party, or continuing under your current contract, which should be honored by the processor regardless of a merger. You may not be able to sell new accounts under the old Schedule A in such a case, but you should be able to continue getting paid in a similar fashion as before for the deals that you already closed.

They Should Not Force You to Buy Their Hardware - Your processor should not demand that you only buy equipment from them, and you should be free to choose your supplier. Now, it's perfectly fine if the processor gives you incentives to buy from them, such as heavy discounts, but you should not be forced to do this as per your contract.

Be Sure Their Reporting is Accurate - The rates of a given processor may be great, but that means nothing if they're actually charging you much more in hidden fees. You should be able to look up reports of what fees they are charging you and what residuals you are receiving, and the actual numbers that show up in your bank account should match this.

Go with a processor that offers the opportunity to look at reports online. This will help make everything more clear.

Never Pay to Become a Sales Agent - As in any other field, if you must pay upfront to join a sales team, then something fishy is going on. Don't fall for programs that charge you for training; there are plenty out there that offer similar amenities for free. There is simply no reason why you should have to do this, so be wary and steer clear from these kinds of processors.

Find a Company That Communicates Well - One of the most important things in any relationship—business or otherwise—is having good lines of communication. You should be able to have your questions always answered and your concerns addressed in a timely manner.

Also make sure that you have access to the management of the company that you're working with. This will help you get what you need much faster and it will also help avoid miscommunication. Going through all the members of the company's hierarchy can be like a game of “telephone,” after all, and things can get distorted.

Finding a processor to work with when you're starting out can be overwhelming, but it helps to know that there are many good ones in the industry. The key is to try many different companies and eventually find one that you can build a strong, long-term relationship with. If you're still having trouble finding the right one for you, though, feel free to get into contact with North American Bancard, and we'll help you out.

Posted by: Scott Shaw AT 03:00 pm   |  Permalink   |  Email

How to Become an ISO Agent?

To become an ISO agent, you will need to partner with a reputable ISO organization and undergo their training program to learn about payment processing and merchant services. Once you have completed the training and obtained any required certifications, you can start prospecting and signing merchants to process transactions through your ISO organization.

Becoming a credit card processing agent can be a rewarding career choice for individuals interested in sales and the financial services industry. Credit card processing agents play a crucial role in helping businesses accept and process electronic payments from customers. In this comprehensive guide, we will outline the steps to becoming a credit card processing agent, including training, skills required, finding a reputable company to work with, and tips for success in the industry.

Step 1: Understand the Role of a Credit Card Processing Agent

  • A credit card processing agent is responsible for selling merchant services, such as credit card processing, to businesses.
  • Agents work with financial institutions or third-party companies to help businesses set up and manage their payment processing systems.
  • Agents earn a commission on sales they make, as well as residual income on the transactions processed by the merchants they sign up.

Step 2: Acquire the Necessary Skills and Training

  • Strong sales skills are essential for success as a credit card processing agent. Agents must be able to effectively communicate the benefits of credit card processing to potential clients.
  • Agents should have a good understanding of the financial services industry, as well as knowledge of industry regulations and compliance requirements.
  • Training programs offered by financial institutions or third-party companies can help agents develop the skills and knowledge they need to be successful in the industry.

Step 3: Research and Choose a Reputable Company to Work With

  • It is important to research and choose a reputable company to work with as a credit card processing agent. Look for companies with a strong reputation in the industry and a track record of success.
  • Consider factors such as the commission structure, training and support provided, and the range of products and services offered by the company.
  • Reach out to other credit card processing agents or industry professionals for recommendations on reputable companies to work with.

Step 4: Apply to Become a Credit Card Processing Agent

  • Once you have chosen a company to work with, you will need to apply to become a credit card processing agent. This may involve submitting an application, undergoing an interview process, and completing any required training programs.
  • Be prepared to demonstrate your sales skills, industry knowledge, and commitment to success as a credit card processing agent.

Step 5: Begin Selling Merchant Services

  • Once you have been accepted as a credit card processing agent, you can begin selling merchant services to businesses. Use your sales skills and knowledge of the industry to effectively communicate the benefits of credit card processing to potential clients.
  • Provide excellent customer service and support to the merchants you sign up, and help them set up and manage their payment processing systems.

Step 6: Build Your Client Base and Grow Your Business

  • As you gain experience and build your client base, continue to focus on growing your business and increasing your income. Look for opportunities to sign up new merchants and expand your client base.
  • Take advantage of training and support resources provided by the company you work with to help you be successful in the industry.


Tips for Success as a Credit Card Processing Agent

  • Develop strong sales and communication skills to effectively sell merchant services to businesses.
  • Stay up to date on industry regulations and compliance requirements to ensure you are providing accurate information to clients.
  • Provide excellent customer service and support to the merchants you sign up to build trust and loyalty.
  • Network with other credit card processing agents and industry professionals to learn from their experiences and gain valuable insights.
  • Stay organized and manage your time effectively to maximize your sales efforts and grow your business.

Conclusion

Becoming a credit card processing agent can be a rewarding and lucrative career choice for individuals interested in sales and the financial services industry. By acquiring the necessary skills and training, choosing a reputable company to work with, and focusing on providing excellent customer service and support to clients, you can be successful as a credit card processing agent. With dedication, hard work, and a commitment to learning and growing in the industry, you can build a thriving business as a credit card processing agent.

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