The short answer
Most people never build a processor. To become a registered ISO you need a sponsor bank, which must register you with Visa before you perform any services, and you take on PCI DSS duties as a service provider. The faster route is a Sub ISO program: you sell under your own brand on an existing ISO's registration and sponsor bank.
What Does It Take to Register as an ISO?
A bank sponsor and a network registration. Visa's rules say "a Member must register a Third Party Agent with Visa," and "registration must be completed before the performance of any contracted services or Transaction activity." Visa's merchant pages list "Third Party Agents (TPA) who perform solicitation activities (ISO)" among the agents that "must be registered in the TPA Registration Program" before banks and merchants can use their services.
Why Do You Need a Sponsor Bank?
Because only a member bank can bring you into the network. Visa requires that "a Third Party Agent must have a direct written contract with a Member to perform services on behalf of the Member," and a separate registration is required for each sponsor relationship. The sponsor keeps real control, including approval of merchants and merchant fees.
What PCI DSS Duties Come With It?
Service provider duties. The PCI Security Standards Council lists "independent sales organizations (ISOs)" among service providers, and Visa says issuers and acquirers "must ensure all their service providers demonstrate PCI DSS compliance at least every 12 months."
Do You Need a Money Transmitter License?
It depends on the state and on whether you touch the money. The model law most states draw on, from the Conference of State Bank Supervisors, says a person "may not engage in the business of money transmission" without a license, with an exemption for an agent of the payee collecting payment for the payee's goods or services. Ask counsel before you handle settlement funds.
How Is a Payment Facilitator Different?
A payment facilitator signs merchants itself. Visa defines it as an entity that contracts with an acquirer to deposit transactions or receive settlement on behalf of sponsored merchants, and it still needs a sponsor and registration. That is more control and more liability than an ISO takes on. The comparison is in PayFac vs ISO.
Why Is a Sub ISO Program the Faster Route?
Because the registration and the sponsor bank already exist. The Batch Group Sub ISO Program is a white-label merchant services program for agents and sales offices, run on Batch's ISO registration and sponsor bank, with interchange-plus pricing and lifetime residuals. It is selective, with real monthly minimums. See when to become a Sub ISO.
Commonly Asked Questions
How do you become a registered ISO?
Sign with a sponsor bank, which must register you with Visa as a Third Party Agent before you perform any services, and meet PCI DSS as a service provider.
Do ISOs need a sponsor bank?
Yes. Visa requires a Third Party Agent to have a direct written contract with a member bank, and a separate registration for each sponsor relationship.
Does a payment processor need a money transmitter license?
It depends on the state and whether you handle settlement funds. The CSBS model law requires a license for money transmission, with an exemption for an agent of the payee. Ask counsel.
What is the fastest way to start selling payment processing?
Join a Sub ISO program, which lets you sell under your own brand on an existing ISO's registration and sponsor bank.
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