Independent Sales Organizations (ISOs) and ISO Agreements

Independent Sales Organizations (ISOs) Need ISO Attorneys

Independent Sales Organizations, or ISOs for short, are third-party companies that aren’t banks themselves but are contracted by credit card member banks to procure new merchant relationships.

ISOs are involved with things like terminal purchases or leases, customer service, soliciting and retaining cardholders, new functions for bank cards, and so on. In the course of doing business, these companies face all the typical challenges of the electronic payments industry, including disputes both external and internal. When it comes to ISO litigation, there’s a lot to know.

But just because an ISO is independent doesn’t mean it needs to go it alone. ISO attorneys are experts in all aspects of ISO and Member Service Provider (MSP) business. At Global Legal, we help ISOs and MSPs navigate ISO agreements, referral/residual agreements, high-risk merchant placement, and risk management related to industry compliance, and we even advise on underwriting merchants.

Independent Sales Organizations (ISOs) and Member Service Providers

Since an ISO is not a bank, an ISO will have a separate contract or ISO agreement with both the merchant and the bank when involved in a business relationship for electronic payment processing. If the ISO provides the equipment for handling credit card payments, for instance, it may receive a processing fee; or the ISO may be responsible for collecting delinquent accounts for the bank and have to provide payments to the merchant. 

‌A Member Service Provider (MSP) is almost the same as an ISO, but MSPs are specific to MasterCard. An MSP has been registered by MasterCard to provide services to other MasterCard members. All members of MasterCard and Visa must register their ISOs or MSPs with their card associations. Member Service Providers otherwise have the same responsibilities as ISOs but report to a different bank.

Understanding ISO Agreements 

Because the ISO is not an employee of either the bank or the merchant, separate ISO agreements are needed for each. A complex legal relationship exists between the bank and the ISO, and the relationship between the ISO and the merchant must be considered on its own terms, too. An ISO merchant attorney who has detailed knowledge of this entire segment of law is necessary to create or review an ISO agreement.

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ISO Litigation with Global Legal Law Firm

ISO litigation can be tricky and often involves multiple interested parties. When a lawsuit involves multiple plaintiffs or defendants and numerous complaints or cross-complaints, the courts call it “complex” litigation. A lawsuit between an ISO and a bank or an ISO and a merchant would be complex litigation, and such a case would need a specialized lawyer who is used to complicated, entangled cases.

ISOs who find themselves the subjects of such lawsuits or who need to bring suit against merchants or banks for failing to honor their agreements will need the guidance of a good attorney. Global Legal attorneys combine decades of real-world experience in navigating the tangles of multi-party lawsuits. Schedule a consultation to learn how we can help ISOs through the complicated regulatory landscape while helping you manage your key contracts and relationships.

Contact Global Legal Today

Our team of experts can walk you through all of your ISO issues and get you through to the other side.