The question I get asked most often is, which type of payments relationship is right for me? Another way to ask this is how do I monetize the business relationships I have so I can establish a recurring residual stream from payments?
There are a number of possible alternatives for entry into the payments world to make a profit. Here are a few:
Independent Sales Organization (ISO) format – where each merchant submits a completed application, is fully underwritten and upon acceptance, is given their own merchant ID number (MID) and boarded for merchant processing.
Relative roles within the ISO format:
Payment Facilitator (Payfac) format – where the Payfac is the merchant of record and each merchant is signed up under them as a sub-merchant. The merchant submits some basic information, passes a credit check, AML/OFAC check and if approved, is set up for processing in very short order.
Should I have a referral relationship, a sales agent relationship, should I become a registered retail ISO or a registered wholesale ISO, should I become a registered payments facilitator or use a payments facilitator as a service?
And the answer is that it depends on a lot of factors and considerations. Things like: what type of organization or company do you have? How well funded is your plan to break into electronic payments? How much experience do you have in the payments industry? How much help will you need in getting started? What’s your long-term plan or vision for what your company can be? What’s your timetable for getting started? What’s your budget for the start-up phase?
You will need to explore all of these areas and several more before you focus in on one format of participation.
The most important thing you can do is get accurate, detailed information from an informed neutral source with lots of experience in payments. That is, you should engage a consultant.
You need to look for a company that has concluded agreements on behalf of their clients for all of these formats.
Here’s what you need to watch out for:
When you choose Field Guide as your consultant, you will always be working directly with a senior partner.
For a reality check on your search for an advisor, give us a call. We’ll be happy to talk you through your plan and make some recommendations.
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