Merchant Networks

Marketing by ISO/MSPs

To market merchant accounts, an ISO/MSP must be sponsored by a member bank. This sponsorship requires that the bank verify the financial stability and suitability of the company that will be marketing on its behalf. The ISO/MSP must also pay a fee to be registered with Visa and Mastercard and must comply with regulations in how they may market merchant accounts and the use of copyrights of Visa and Mastercard. One way to verify if an ISO/MSP is in compliance is to check a website or any other marketing material for a disclosure "company is a registered ISO/MSP of bank, town, state. FDIC insured". This disclosure is required by both Visa and Mastercard and will cause a fine of up to $25,000 if it is not clearly visible. In almost all cases, if there is no disclosure, the company is likely to be an uninformed 4th party or worse. In many cases unregistered operators have been responsible for some of the worse horror stories from merchants.

Obtaining a merchant account through a registered ISO/MSP is the most common way to obtain an account. The process is usually much simpler than going directly through a bank. One reason is that the merchant approval process and underwriting is streamlined and more favorable to a variety of business types and products sold. ISOs/MSPs also add value to the basic services of card authorization and deposit. Many work directly with the underwriting bank to assure that support and customer service is targeted to many segments of merchants with unique needs. In many cases, merchant accounts obtained through an ISO/MSP can cost less than if the merchant contracted with the bank directly.


[edit] Rates and fees
A Merchant Account has a variety of fees, some periodic, others charged on a per-item or percentage basis. Some fees are set by the merchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank according to a schedule of rates called interchange fees, which are set by Visa and Mastercard. Interchange fees vary depending on card type and the circumstances of the transaction. For example, if a transaction is made by swiping a card through a credit card terminal it will be in a different category than if it were keyed in manually.