PEP Episode 063 — Super ISOs Are Taking Over Payments—Is the Old Model Dead? | New Payments Power Structure

Super ISOs Are Reshaping the Payments Industry—Are You Keeping Up?

The payment processing landscape has undergone a dramatic transformation. What was once a top-down ecosystem dominated by acquiring banks and processors is now increasingly driven by a new force: Super ISOs. These fast-moving, well-capitalized organizations are effectively operating as mini-processors, and they’re rewriting the rules of how merchant services are delivered and scaled.

In this episode of The Payments Experts Podcast, produced by Global Legal Law Firm (https://www.globallegallawfirm.com/po…, Managing Partners James Huber and Christopher Dryden sit down with Director of Operations Jeremy Stock to break down how Super ISOs have flipped the traditional model—cutting out middle layers, forging direct relationships with sponsor banks and card brands, and offering agents more flexibility, fewer restrictions, and better economics.

Key Discussion Points:

• Why Going Registered Isn’t the Endgame Anymore:
Unless you’re boarding 500+ deals a month, becoming a registered ISO might not be the smartest path. Super ISOs offer pricing, support, and tech infrastructure most mid-size players simply can’t match.

• Processor Politics and the $4M Surprise:
Learn how even top-tier ISOs are being blindsided by sudden clawbacks, policy changes, and one-sided amendments—like the now-infamous $4 million repayment demand from CardConnect.

• Legal Landmines Around Agent Classification:
The blurred lines between independent contractors and de facto employees are exposing ISOs and MSPs to serious liability—especially when agents leave and take portfolios with them.

• The Unregulated Agent Problem:
Without a formal “bad agent list,” problematic agents who repeatedly flip merchants continue to wreak havoc—raising compliance, brand, and portfolio stability concerns.

Whether you’re scaling your ISO, building a PayFac, or working as a seasoned agent, this episode delivers insider legal and strategic insights to help you stay competitive and compliant in this fast-changing environment.

Ready to navigate the modern payments landscape with confidence? Subscribe to The Payments Experts Podcast and visit globallegallawfirm.com to learn more.

*Matters discussed are all opinions and do not constitute legal advice. All events or likeness to real people and events is a coincidence.*

Transcript

Christopher Dryden (00:00):

He said, Hey, separate and apart. I was thinking about registering and I was like, well, look, I, I, I said, you know, the biggest ISO program was First Data and they fucking hated it so much and managing it and all the bullshit that ultimately they bought Card Connect and just pushed all that down to Card Connect, right? Like if you have an issue with Card Connect and you’re, you know, you’ve been pushed to them, you still deal with Fiserv, Fiserv owns Card Connect. You can’t find retail iso, nobody wants to deal with retail iso. So what’s emerged is, and I’ve said this on another podcast, there’s all of these super ISOs that have basically become like a mini processor. They use the bank and processor as functionaries bank’s always been a functionary. They needed to move money, but the actual idea of authorizing a transaction that becomes something that’s mechanical, that the processor does. But ultimately you’re registered with the card brands, you have a direct relationship with the bank, and you’re subcontracting through the processor for that, that actual function. Everything else that used to be at the processor level, customer service, you know, however long, uh, you know, any sort of reporting, you know, ancillary services that can be sold. Anything that you can think of that a processor used to provide the super ISO provides, but now they provide it would, the idea of the agent is important at the processor level. The agent, it’s, it, you’re important maybe, right?

James Huber (01:41):

Not really.

Christopher Dryden (01:42):

Not really. Pretty much. Never. Never. Totally. Even with the people now who are the largest ISOs with processors, they’re still getting screwed. They still get fucked over totally all the time. And if you have an agent who built an ISO based on doing what’s right for the agent and also preparing, like, like preparing and providing an, an, an environment that is conducive to the agent. Like, Hey, here’s 30 different POS systems that you could, you, you know, you can use. Don’t worry about managing the relationship. I’ll manage the relationship for you. Here are the terms. Just go sell, go sell. And if you have any issues or any problems, come back and talk to me. One of our clients, dude, they’re a huge iso, huge. And the owner, ’cause he loves it, will still go on the phone with you. No problem.

James Huber (02:37):

Yeah.

Christopher Dryden (02:37):

Yeah. And, and there’s

James Huber (02:39):

A few like that. Yeah. Where the guy, the guys are still the guys and, you know, you wonder when these these big companies sell, does it change and kind of not with, you know, some of our better big clients, it’s trickle down. It’s every single person there.

Christopher Dryden (02:55):

It’s make the pie bigger, make the pie bigger. Like all these guys make the pie bigger, which makes my slice bigger. Yeah. That’s the way that they look at

James Huber (03:02):

It. Yeah. And they hook ’em up. I mean, we have, we’ve had clients for years giving away low risk processing to balance out their high risk books. So like the, the regular agents when they come to us and they’re like, I want to book a deal with tsys, I want a, you know, card connect deal or going, don’t do that.

Christopher Dryden (03:20):

Yeah.

James Huber (03:21):

Even somebody on here last week was saying they loved Card Connect and I was like, yeah, everyone used to love them. But

Christopher Dryden (03:28):

I don’t know. So I think it’s how married you get to like the backend systems. I think it’s, you know, how easy they are to use I Well,

James Huber (03:36):

When they send out a clawback notice saying, I agree, we’ve been overpay you for two years, gimme $4 million. That’s not really great.

Christopher Dryden (03:43):

Yeah, no, no, I’m with you. <laugh>. Like, I, I, I don’t, you know, it’s, it’s this idea of we hold the money, so here are the terms,

James Huber (03:51):

Right?

Christopher Dryden (03:52):

And whether or not we bargain for ’em on the front end, right?

James Huber (03:55):

Yeah. But all, when these people come to us and they’re saying, Hey, this is, this is the path, you know, it’s like you go to college, you get a job, you become an agent, you work for an iso, then you become your own registered iso or going, no, that’s not the path anymore. Yeah. I still think you should probably go to college for most people, but like, maybe not. And for,

Jeremy Stock (04:13):

So what is the path, James?

James Huber (04:15):

What the path is, if you’re clocking anything less than 500 to a thousand deals a month, you go work for one of these bigger ISOs, you’re gonna get bigger, pro better, better pricing, better service, better technology. And I mean, you’ll still, the solutions will be the same. But you go to these guys, you’re not hooked to selling clovers. You’re not hooked to selling whatever you sell. Well,

Christopher Dryden (04:37):

Look, it’s, it’s the same thing with what we do, right? There are people that work here that are in this office that are really smart, capable attorneys. But you start talking to ’em about the business of the law firm that are lost. There are a bunch of agents that are really good salespeople and they can make a shitload of money being good salespeople. But you talk to them about having to manage all these different relationships. Look at contracts, like that’s where some of these super ISOs have gotten really smart. They just treat the agents really well because that’s the driver of new business. And they make it so that all they have to do is sell the minute. Like, you know, you get people that don’t understand business,

James Huber (05:17):

HR,

Christopher Dryden (05:18):

Accounting. Yeah, totally. Like, you know, all

James Huber (05:21):

Of these classifying your workers. I mean, that’s one of our huge litigation topics that come up over and over and over. You’ve got these 10 99 agents that you’re making do this, that the other thing, those are employees.

Christopher Dryden (05:32):

Even yesterday I had somebody who send me a contract that they wanted to like exhibit control over independent contractors to the point where they’re like, look, you’re blurring the lines so much. You’re like, I understand you want to do this, but Yeah. At what cost? It gives you an out. Yeah.

James Huber (05:51):

Yeah. And then so that agent, they leave and they flip all their business and you’re going, I want to sue them. That agent is going, come at me. I’m gonna hit you with mass misclassification.

Christopher Dryden (06:02):

Yeah.

James Huber (06:02):

No, I’m taking all my merchants and keep paying me. And if they call me up, I’m going, you probably should. ’cause he’s gonna get a plaintiff’s attorney that’s gonna work this for free and he is gonna win. And it’s just not a matter of how much. So you gotta let this guy go because you treated them poorly.

Christopher Dryden (06:19):

Yeah. I mean, there’s all these business practices that people want to keep repeating in, in this particular industry. Like yesterday, um, Leo gave me a, like, we had to do a response to an attorney demand letter, and it was about equipment and payment processing. And I’m like, Hey dude, when you tie these two agreements together and you have the same person selling them and one fails and you’re trying to enforce the other one could become a problem for you. Right? I mean, like, he’s not, he hasn’t been doing this long enough to see or know any of that. But we come from the time of here, let me sell you a fiction, and here let me strap a whole bunch of equipment to it, <laugh>. And, and, and you know, essentially there’s deceptive practices that go with sales that you just have to be aware of. And there’s a new generation of that happening.

Jeremy Stock (07:13):

I used to get more calls where it was someone, whether it was an agent or ISO who said, Hey, I’ve built up my book. I’m ready to sell. I haven’t heard that a lot lately. So can you guys talk? Has, has something changed in the industry? Is that No, not happening as much. It’s still,

James Huber (07:29):

It’s still happening. It went down for a while because of uhoh or say politics. You know, there was, there was stuff going on. Interest. No, but interest rates, right? Interest rates make it hard.

Christopher Dryden (07:38):

Money’s more expensive. Money. Yeah. Money’s more expensive. Like, it was, it was really easy to buy when money was cheaper. Um, the other problem is, is that, I mean, this is a long conversation. If you want to have a podcast about this, one of the problems is how close are you to the money? And because look, if I am, if I’m not reg in a registered iso, then I’m one step down from the money. And if I am an agent for an agent of an ISO that’s registered, I’m three steps away from the money. If I’m a purchaser of that money, there’s a lot that could happen that could prevent me from collecting what I’m looking for and what I’m buying.

Jeremy Stock (08:19):

Yeah, that’s interesting.

Christopher Dryden (08:20):

Beyond like bad faith from the seller, total things outta my control where the money just stops flowing. And at that point in time, I just spent a whole bunch of money for what? So the price that actually can be commanded for somebody that’s further down the chain, it’s a lot less.

James Huber (08:39):

And so I, and yeah, I always say like, you, you probably shouldn’t sell most of the time, you know, people, most of the people sell because they’ve already spent the money and they need the money. You know, unless you’re selling for a huge portion, like these small deals, they’re not great. They, you don’t get a lot of money for it, you know, unless you’re higher up. Now the, the idea is,

Christopher Dryden (08:58):

Well, no, I, I disagree with that. I think that there are deals out there where if you go buy the residual of an agent, that’s kind of, and look they’re few and far between, but say you find somebody with a $10,000 residual that’s had merchants that have been with them for eight to 10 years, and it’s all relationship. And if you just manage and have a good handoff of that relationship, you can buy it for 20 x and watch it go on for the next a hundred months. That’s a pretty good return.

James Huber (09:27):

It’s good, but it’s risky because what happens when that agent says, sure do miss getting 10,000 bucks of mailbox

Christopher Dryden (09:34):

Money? No, I, no, I agree with you. Like, they gotta be like old or getting out of the business or something along those

James Huber (09:39):

Lines, or you bring it, I mean, the best deal is you bring ’em in and then they work with you. Yeah. If you’re one of these good ones, but some of our bigger ISOs, they, they’re not buying up people that much because you know, you’re buying up a potential problem.

Christopher Dryden (09:51):

<laugh>. Yeah. I mean, dude, that’s the one that I, so for all the wholesale ISOs out there, you all should get together and create a agent list, like a bad agent list. Like we have, we have one. People never,

James Huber (10:03):

I was, I always say, I was like, why didn’t you call, like people should be calling us before they hire an agent that’s been in the space.

Christopher Dryden (10:10):

I, I have a phone call right after this. And they mentioned an agent’s name that said, Hey, I think we want a sewer for defini defamation and, and flipping merchants. And I looked at the name and I’m like, God, why does that sound so familiar? And I can’t remember the guy’s name, but you would remember him. But I, all of a sudden I went, oh, I know who that is. And somebody hired us three years ago to go after this person for flipping merchants. Like Yeah, it’s

Jeremy Stock (10:35):

Exact same thing. I remember that Chris. Yeah. So

Christopher Dryden (10:37):

Most of the time there’s merchants that like, or, or excuse me, they’re agents that they’re just gonna do the same thing over

James Huber (10:45):

And over and over and over and over and they get away with it. They maybe get sued. They usually, I mean, a lot of times it’s not worth suing these little guys that do it. But

Christopher Dryden (10:54):

That’s gonna be my phone call.