Getting Leads as a New ISO in Payments
A multichannel approach to growing your ISO by building relationships
This guide will show you a few different ways you can get leads in the payments space. But first, let me tell you about me and why I wrote a book about this topic.
Like most people, I just found myself in payments a bit randomly. I was in an outbound sales role for Yelp when I walked into an interview room with a company called Payline Data. Knowing nothing about payments, but having a drive to sell, I started in the industry.
multichannel growth for ISOsPayline Data was a Wholesale ISO processing over 1 billion in payments annually. Eventually, we sold to Providence Equity (Pineapple Payments), which recently got acquired by FiServ. My first role was handling inbound sales leads, but I eventually moved up to sales team management and then strategic partnerships. Based on this path, I believe I can help small ISOs gain new leads and grow their book of business.
I believe that ISOs now have to have a pitch outside of cost. With so much competition, low pricing is baked into winning deals with business owners and getting agents to board deals through you.
Payments ISOs then and Now
Before I get specific with a few tactics that can get you more leads, it is important to talk about how the space has changed in the last 10 years. With the rise in PayFacs, ISVs, and software, it is paramount to be aware of how ISOs can compete in 2024.
#1: Keeping pace with Technology
I believe this is the biggest challenge ISOs face in 2024. There are so many software products that help small businesses become more efficient throughout the day and also include payments. Payments have become a “value-add”, which makes it more difficult for ISOs to win business if they are not on the same level with technology.
In addition to software becoming more and more popular, the rise of digital currencies, contactless payments, and mobile wallets, it's crucial for payments companies to embrace new technologies. Investing in researching, security, and convenience should be a must, in my opinion. Using advancements in blockchain, artificial intelligence, and machine learning can help streamline processes, cut down on fraud, and offer personalized experiences.
Partnering with fintech startups and tech providers is another smart move for payments companies. Working together with these innovators allows companies to add new features and expand their services without having to build everything from scratch. For example, integrating AI-driven fraud detection systems or using blockchain for secure transactions can give them a competitive edge. Staying connected with industry groups and standards bodies also helps companies stay up-to-date with new technologies and regulatory changes, ensuring they remain compliant and build trust with customers and partners.
#2: The layers between Agents, ISOs, and Processors
As we all know, the payments industry has a lot of layers. If a small business signs up with an agent, they are not aware of the third parties involved to get a merchant account set up. Here’s an example:
Owner signs up with an agent > Agent moves the deal to the ISO> ISO quickly verifies and sends to processor> Processor needs more documents in underwriting > ISO goes back to Agent > Agents gets the Docs from the merchant > Processor Approves the Deal > Agent gets the VAR sheet and boards them on a gateway > Merchant now has a Processor account and gateway account and customer service is through the agent.
What I laid out above is historically how opening up a payments account worked. Just typing that out hurts me, it is no wonder this process is being streamlined with tools like Under. This led to high attrition rates and slow onboarding times, which opened the door for PayFacs.
#3 Pricing Actions
Even if you are successful in growing a book of business in hopes to sell it for a multiple, there are issues because you do not own the MIDs. We have all seen the issues that pricing actions have caused. Merchants get frustrated, the processor prints money, and the agent/ISO is left with dealing with the customer service tasks, and unfortunately, cancelations.
So, where is the space going?
I believe that ISOs now have to have a pitch outside of cost. With so much competition, low pricing is baked into winning deals with business owners and getting agents to board deals through you. Additionally, business owners expect good customer service and an easy way to sign up to start processing. So, outside of those things, what can an agent/ISO do to win more deals?
Starting your Payments ISO
Even with the more competitive than ever landscape, starting and growing a book of business is a great way to start a company or another source of income. In order to grow your ISO and book of recurring business, you need consistent leads. I have detailed below 5 ways that worked for us in the past and can work for you today.
Sales Agents
As we know, agents remain a big part of the payments indsutry. In fact, we have built the Under platform to help ISOs empower agents. So, how do you get agents to board deals through you?
1: Tools
There are so many ISOs that are all fighting for the same agents, so you need to be able to compete when it comes to giving them tools to sign deals. They need to be able to pitch cash discounting, they need to have modern hardware/POS systems, they need robust reporting for their business, and more.
2: Schedule A
Because competition for agents is high, transparency and competitive pricing when it comes to your splits with agents is a must. When we ran Payline, we used to be able to close deals with 50% residual splits, that is simply not the case anymore. As an ISO, you are going to lose deals quickly if you low-ball agents on splits.
3: Relationships
We know that the Payments industry is small compared to other financial industries and we also know that agents can move from ISO to ISO. Because of this, treating your agents well and fostering relationships goes a long way.
Software Partnerships
If you can find software platforms to partner with and be their payments partner, you can generate “free” MIDs.
ISVs are a large part of where payments have gone the last few years. Businesses now view payments as a “value add” to software platforms that help them run the day to day of their businesses. For example, a Food Truck signs up with a Pint of Sale System that has been built specifically for Food Trucks. Part of the value of that POS system is payments are built in. If you can find software platforms to partner with and be their payments partner, you can generate “free” MIDs.
Payments companies can greatly benefit from partnering with Independent Software Vendors (ISVs) to enhance their service offerings and stay competitive. By collaborating with ISVs, payments companies can integrate specialized software solutions that add value to their platforms, such as advanced analytics, fraud detection, and customer relationship management tools. These partnerships allow payments companies to offer a more comprehensive suite of services without having to develop everything in-house.
Additionally, working with ISVs can help payments companies tap into new markets and customer segments by leveraging the ISV's expertise and existing customer base. This collaboration not only accelerates innovation but also provides a more seamless and enriched experience for end-users, ultimately driving customer satisfaction and loyalty.
Association Partnerships
Another way to generate consistent inbound leads is partnering with local associations or organizaitons and stepping in as their trusted “payments expert”. One example is partnering with an organization like the American Society of Plastic Surgeons. As a group of surgeons, all of their offices need a payments solution, and the organization would love a way to give them advice on a part of their business, and even make revenue from the payments revenue.
I recommend getting vertical in a specific industry like medicine, and reaching out to organizations in that vertical to try to form a partnership.
Content Website Partnerships
There are a lot of websites that have a business models that write content, and then pass leads to the companies that can place those leads. A few examples in payments are:
Nerd Wallet
Merchant Maverick
CardFellow
CardPaymentOptions
These are just a few, but if you quickly do searches like “Best payment processors for small businesses”, you can find pages of companies that fit this model. Since they make money off of generating visiotrs to their websites, you can reach out to them and form a partnership by paying them per lead, residually, or in other ways. This is an effective way to have consistent inbound leads.
Building your Websites Standing (SEO)
A more long term approach is to build the Domain Authority of your website. You do this by growing the number of visitors to your website, growing the number of keywords you rank on, having visitors to your website take action, and more. As your business grows over time, part of this willl happen naturally but if you focus on this as you go, your website can become a trusted source for certain searches on the internet.
Pro tip: Use SEMRush to find keywords to rank on, see what your competitors do, and much more.
Concluding Thoughts
As I mentioned, the payments space is constantly changing. Acquisitions continue to be a massive part of the space. ISVs and PayFacs continue to gain more market share. But, that doesn’t mean that ISOs can’t be profitable and lead to a good multiple when exiting.
I hope this was valuable, thanks for reading!
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