ISO vs Agent vs Referral Partner: Which Merchant Services Model Fits

An ISO (independent sales organization) is a company that signs up merchants for card processing on behalf of a bank. Card processing for a business has to be backed by a bank that is a member of Visa and Mastercard. The bank that stands behind an ISO is its sponsor bank.

ISO merchant services work like this:

• The bank registers the ISO. Visa's rules call it a Third Party Agent, and the bank must register it before it does any work (Visa Rules 1.9.8.6, edition April 18, 2026). Mastercard lists ISOs as Service Providers doing "Merchant... Solicitation", and the bank registers them and pays the fees (Mastercard Rules 7.1 and 7.10, June 2, 2026).
• The ISO reviews applications. This review is called underwriting: checking what the business sells, its history and its risk, under the bank's policy.
• The ISO sets merchant pricing and keeps the margin between what the merchant pays and its own costs. The biggest of those costs is interchange, the fee the card-issuing bank charges on every sale.
• The ISO answers for losses. If a merchant runs up chargebacks or fraud and can't pay, the ISO usually covers it under its bank contract. Visa holds the bank responsible for its agents' losses too.

You'll also see the term MSP used for a similar role. START is a registered MSP/ISO of Elavon, Inc. (Georgia) and the Canadian branch of U.S. Bank National Association and Elavon. That's why START can underwrite a merchant account and connect it to the Authorize.Net gateway without the partner becoming an ISO.

A merchant services agent sells processing under the umbrella of an ISO. The agent finds the merchant, helps with the application and stays the merchant's main contact. The ISO and its bank approve the account, fund it and deal with the card networks.

Two documents shape an agent's business:

• The agent agreement: how you're paid, how long pay continues, what happens if you leave, and any non-solicitation clause (a promise not to move your merchants to another provider).
• Schedule A: the page of the agreement that lists your buy rate, the wholesale cost the ISO charges you. You usually earn the difference between what the merchant pays and your buy rate.

Agents are usually paid residuals: a monthly share of the processing revenue from each merchant, for as long as the account runs and the contract allows. How residuals are calculated, and the terms to check before you sign, are covered in our guide to merchant services residuals and commissions.

Registration: because an agent solicits merchants, the ISO's sponsor bank typically registers the agent with Visa and Mastercard. Your ISO arranges it with the bank. It's also why a Visa-registered agent can be listed if a bank ends the relationship for cause (Visa Rules 10.10.1.1).

A sub-ISO sits between an agent and a full ISO. It usually runs its own sales team or agent network under a larger ISO's bank relationship, takes on more of the support and some of the risk, and in return keeps a bigger share of the margin. Terms vary widely, so read the risk section of any sub-ISO contract closely.

A referral partner does the least selling. You introduce a client who needs to take card payments, and the provider does the rest: the application, underwriting, pricing, setup and support. It's the simplest merchant services partnership, and it suits businesses that already have clients' trust but don't want to sell processing as a product.

In a typical merchant services referral program:

1. You share a referral link or co-branded application with your client.
2. The client applies, and the provider reviews and approves the account.
3. The provider sets up processing and supports the merchant.
4. You're paid, usually a fee per approved merchant, sometimes a share of the residual.

Do referral partners need to be registered? Neither Visa's nor Mastercard's public rules say directly. Visa's definition of a Third Party Agent covers anyone who provides payment-related services "directly or indirectly" to a bank or its merchants. So it's the sponsor bank or ISO that decides whether a pure referrer is registered. START explains the requirements for each partner type before you sign.

At START, referral partners earn a referral fee per approved merchant. Partners get co-branded applications with their name and logo, a digital application with e-signature (no printing or faxing), and a relationship manager. The clients they refer get interchange-plus pricing with no termination, annual or AVS fees, and most are approved in 1–5 business days. Our guide on how to sell merchant services to your existing clients covers where to put your link.

An ISV (independent software vendor) builds software that its customers use to run their business, like a booking system, a shopping cart or an invoicing tool. When payments are built into that software, the ISV needs an ISV payment partner to give each customer a merchant account.

ISVs usually take one of three routes:

• Refer through a partner. Your software connects to a gateway such as Authorize.Net, and you send customers to a partner like START for the merchant account. START sets up the merchant account and connects it to the gateway. Our Authorize.Net integration guide covers the technical side.
• Join a gateway's own partner program. Authorize.Net's Technology Partner revenue share requires a multi-year contract, at least $5 million in referred payment volume, a Solution ID (a code that tags your transactions) passed in your integration, and a validated integration (Authorize.Net, checked September 30, 2026). That's a high bar for a small software company. The Authorize.Net reseller program guide compares the options.
• Take on the merchant risk yourself. Some large platforms become the merchant of record for their users. That's a different model with its own contracts, underwriting and liability. Read merchant account vs payment facilitator before going that way.

A VAR (value-added reseller) is close to an ISV. It sells or installs software or hardware and often needs the merchant's processing details to set it up. See what a VAR sheet is for how that works.

Start from how you already work with clients. If payments are a side service, you want less selling and less risk. If payments are your business, you want more control.

• Web developers: you build the checkout and already get asked "which processor?". A referral partnership lets you hand off the merchant account and keep building. If you set up many stores, ask about ongoing residuals.
• Design and digital agencies: the same as developers, at a larger scale. A co-branded application keeps your name in front of the client.
• Hosting companies: you have many customers and little one-to-one contact. A referral link in your control panel or onboarding emails fits better than hands-on selling.
• SaaS and software companies: see the ISV section above. Most start by referring through a partner, and only consider carrying merchant risk once volume justifies it.
• Consultants and bookkeepers: you review clients' costs already. Referring suits most. If you want to quote pricing and manage accounts, an agent role is closer to what you do.
• Credit unions: your members' businesses need merchant accounts, and you'd rather not become a processor. A referral partnership keeps the relationship with you while a partner handles processing.
• Franchisors: you want every location on the same setup. Referring locations to one provider keeps setup and support consistent.
• Experienced payments salespeople: an agent contract, then possibly a sub-ISO or ISO once you have a team, capital and a book of merchants.

Not sure where you land? Tell us about your business and we'll explain the partner types and what each needs. More than 90% of START's merchants come through referrals from partners like hosting companies, web design firms, shopping cart providers, franchisors and billing solution providers. For the step-by-step path, see how to become a merchant service provider, or go back to our merchant services reseller program overview.