Payment Services Companies: An Overview

There are several things that drive a business’ sales, such as advertising, competitive pricing, and branding, to name a few. But none of these things actually complete a sale. For that, a business needs payment options. For most businesses, the context in which goods or services are sold (e.g. in store, at kiosks, or over the Internet) determines which pay options are used. In each case, however, the suppliers of those options are usually merchant service companies.

What is a payment services company and how does it operate?


Also referred to as an independent selling organization (ISO) and merchant service provider (MSP), a payment services company provides merchants with payment accounts that match their customers’ pay preferences. For businesses, the value of contracting with ISOs is increased pay options, which drive revenue by making it easy for customers to pay. For ISOs, the benefit of contracting with businesses is the account fees it charges.

To operate legally, an ISO must be sponsored to credit card companies by a bank, which—if card companies accept the ISO—will process the payments received through its merchant accounts. As a consequence of this arrangement, ISOs are often said to have a “bank card relationship” with their sponsor banks, which are technically known as acquiring banks. In addition to processing credit payments, an ISO’s bank can also process debit and check payments.

What types of accounts does a payment service company offer?

ISOs provide check and card services that correspond with how customers buy products and services: at store locations, at non-store locations, over the Internet, by mail, and by telephone.

Account types

ISO accounts for in store sales are known as retail processing accounts, and use card terminals and check reading equipment to read debit/credit cards and checks. ISO accounts for non-store sales are known as wireless accounts, and involve wireless terminals or mobile devices that can function as credit/debit card terminals. ISO accounts for Internet payment are known as Internet processing accounts, and facilitate payment by debit/credit card and check. ISO accounts for mail and telephone payments know as mail/telephone order accounts, and facilitate payment by debit/credit card and check.

Some merchants need all of these accounts, while others don’t. In each case, the goal is to have as many accounts as (a) allow consumers to use their preferred method of payment, and (b) allow as many consumers as possible the opportunity to buy.

Do merchant accounts improve business revenue?

While payment services companies can’t promise to improve a business’ revenue by providing merchant accounts, having the right accounts enhances a merchant’s ability to do business. For example, research shows that the average cash purchase is $9, while the average credit purchase is $40. Translated into daily business, this means that customers who use credit make bigger purchases than customers who pay with cash. Over time, this difference could indeed improve revenue.

At AVP Solutions, we know that merchant accounts are critical for business growth. That’s why we strive to offer the broadest account options and lowest account fees in the business. If your business needs merchant accounts, contact us today.

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