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Merchant services glossary

ISO (Independent Sales Organization)

Also called: MSP (Member Service Provider), Reseller

Quick definition: A registered reseller that signs merchants on behalf of a sponsor bank or processor. ISOs earn a residual on every transaction you process — often for life.

✓Editorially reviewedReviewed by Sam Patel, Merchant services editorUpdated April 1, 2026How we make moneyMethodologyAdvertiser disclosure

In plain English

Visa and Mastercard require every ISO to register with a sponsor bank. The ISO handles sales, support, and pricing; the sponsor bank holds your merchant account and assumes the underwriting risk.

ISOs make money on residuals — typically 20-40% of the markup on every transaction you process, paid monthly for as long as you stay. That's why a good rep stays attentive; that's also why bad reps will lock you into 3-year contracts with stiff early-termination fees.

Why it matters for your bill

Buying from an ISO isn't bad — but always ask: "What's the markup over interchange? Is it interchange-plus or tiered? What's the early-termination fee?" An honest ISO will answer in 30 seconds.

FAQ

An ISO sets up a dedicated merchant account through a sponsor bank. A PSP (like Stripe or Square) puts you on their aggregated master account — faster setup, less stability for high-risk merchants.
How we research & score
  • •Definitions reviewed against current card-network and PCI SSC documentation.
  • •Updated when card-network rules or fee structures change.
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