How payment agents and ISOs find high-risk merchants

What agents and ISOs do

In its guidance for bank examiners, the Office of the Comptroller of the Currency (OCC) describes ISOs and member service providers (Mastercard’s term) as functionally similar third parties that acquiring banks contract with. The ISO solicits merchants and can perform services for the acquirer such as processing merchant applications and charge-backs, detecting fraud, servicing merchant customers, selling or leasing terminals, and processing and authorizing transactions.

The same guidance describes agent banks: often community banks that refer merchants to an acquirer. A referral bank typically does not assume liability for merchant losses; an agent bank that indemnifies the acquirer does.

Registration and responsibility

The OCC’s guidance says acquirers must register third-party organizations with the card association before accepting their services, and must pay an initial registration fee and annual fees for each one. It notes that this fee is typically passed on to the third-party organization.

Registration does not move responsibility. After it, the acquirer remains responsible for complying with the association’s rules on third-party relationships, and those rules make the acquirer liable for its third parties’ actions. The association also requires the acquirer to submit information about its third parties regularly.

Finding merchants who are asking for offers

On Zolution, merchants publish a request for payment offers, and you see the requests that match the coverage you declare: the industries, merchant countries and customer markets you support, and optionally the monthly volumes you accept.

Before you quote, a lead shows seven facts and nothing more. The merchant’s private details, such as total revenue, revenue basis, signer answers, email address and other providers’ proposals, are never shown to you.

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Bringing your own clients

Many of your merchants will come from your own contacts. Create a private application link for a named client: they confirm their email, add their business details and choose which document links to release to you. You can do this without setting up lead coverage first.

A private invitation stays between you and the named merchant. It does not publish a request or invite other providers. The merchant can separately choose to request other offers.

Sending an offer merchants can compare

A Zolution proposal keeps each term in its own field, so a merchant compares like with like: the processing fee and the fixed transaction fee, the rolling reserve and its holding period, the settlement delay and payout schedule, payout fees, the MID structure, the contracting company, the validity, other fees and conditions, the gateway and the connection method. Optional volume tiers each carry a full copy of the terms.

Once a merchant continues with your offer, the application keeps that exact revision. You review the released document links and the website, request changes in the application’s conversation, record your decision and publish setup instructions.

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