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3 Reasons Why ISOs Must Transform Into More Than Merchant Service Providers

3 Reasons Why ISOs Must Transform Into More Than Merchant Service Providers


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Independent sales organizations (ISOs) and member service providers (MSPs) are companies that have developed partnerships with certain financial institutions to provide services to merchants. In the past, this was enough. The market wasn’t as competitive, and business models were simple and effective.

That has all changed, however. ISOs can no longer survive in the current market just selling merchant services. In order to survive and thrive in an ever-changing industry, ISOs must provide comprehensive market solutions, for example bundling point of sale (POS) systems and add-on services like mobile and online ordering.

Partnering with an independent software vendor (ISV) allows an organization to bundle merchant services with other critical software solutions and hardware systems and sell them as a package deal to customers. This newer, more flexible business model is necessary in order to get ahead.


Here’s Why: The Market is Growing Too Competitive

In the past, it was common for ISOs and MSPs to reduce their rates in order to get more business. This was a smart move, as it allowed them to beat out the competition. Now, however, the market is much more competitive, oversaturated with ISOs and MSPs competing with one another for a limited pool of clients. Low rates, if that’s all you can offer, aren’t enough on their own to win out against the competition—it’s no longer a realistic option. If rates continue to get lower and lower, the market won’t be sustainable.

A better option would be to provide additional software and services that are highly-coveted by your clients. Technology solutions like POS or add-on services with integrated payments offer major benefits to your clients. The ability to stay with one provider for both technology solutions and merchant services is appealing to business owners, who often find it difficult to manage so many separate accounts with multiple providers.

ISOs are Getting Sold Around—Credit Card Companies and VARs

New payment providers are bundling their software solutions with integrated payments and selling directly to end-users. To compete with this, ISOs must do the same. Rather than letting this drive them out, ISOs can capitalize on this by partnering with software integrators or ISVs that have already partnered with their payment service of choice.

By partnering with an ISV, you can integrate payments and solutions and sell them as a bundled solution. What’s more is that you can have your merchant services bundled and sold through the ISV’s network of dealers, and you can act as a dealer within the ISV’s network. Whether you sell the bundled solutions yourself, or they are sold through a dealer, you will be reaping profits.

You Must Remain Agile or You Will Become Obsolete

The landscape of the industry is consistently changing. ISOs that are locked into the same business model they’ve used for years will end up being edged out by more agile organizations that are able to adapt to the changing needs and growing demands of clients. In essence, ISOs must provide more value to survive.

Because you can no longer remain competitive just by reducing rates, you need to provide additional value beyond payments, and extend your offerings into a portfolio of solutions that are designed to help your clients overcome other business challenges. Not only will this allow you to bring on new clients, but it also unlocks the potential to sell deeper into existing accounts.


To Do This:

  • Take a consulting role: Your clients look to you for guidance and expertise. Discuss their individual business needs and the
    challenges they face, and guide them towards solutions that help them overcome these challenges.
  • Offer solutions and services: Provide payment-embedded POS systems, online ordering solutions, and other consultative services. This can include assistance and guidance on things like marketing, or solutions for loyalty and gift card
    program management.
  • Consider support services: Many don’t have the time to manage, update, and troubleshoot technology on their own. Often, they don’t have the in-house resources necessary to solve issues quickly enough to prevent significant downtime and profit loss. Offer comprehensive support and services, which will increase uptime for your clients and help them stay productive. These services can be offered by your ISV or payment partner.

To learn more about each tactic, download our full eBook, “3 Reasons why ISOs Must Become More than Merchant Service Providers.”


How Star Can Help

Star Micronics maintains a vast array of partnerships with ISVs. This allows ISVs and all the dealers in their channel to include Star Micronics hardware in their bundled solutions. Our hardware integrates with 90% of all POS software in the marketplace, as well as the latest cutting-edge technology to keep customers ahead of the competition.

Our experts have extensive knowledge in the following markets:

Leverage our expertise to determine the technology solutions your clients are looking for, and we can help you offer the right products and services to meet their needs. Star Micronics provides bundled peripherals and accessories with a sleek, modern aesthetic for POS, as well as marketing and consultation support. By partnering with Star Micronics, you can increase your portfolio, your customer satisfaction, and your profits.

To discover the rest of our tips and take your ISO business to the next level, download the full eBook, “3 Reasons why ISOs Must Become More than Merchant Service Providers.”

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