The Switch from Merchant Services Account Provider Banks to ISO’s and Electronic Devices

The Switch from Merchant Services Account Provider Banks to ISO’s and Electronic Devices


In the world of commerce, a merchant is anyone engaged in buying or selling goods for profit. To facilitate credit and debit transactions, a merchant account is essential. This account is responsible for verifying and acquiring funds from charges. Businesses can accept these transactions by partnering with a merchant services account provider. Such transactions can occur in physical stores, over the phone, or in online ecommerce platforms. As consumer expectations evolve, merchant accounts have become a necessity, enabling businesses to offer the convenience of card payments everywhere they operate. Merchant services transition In the early days, banks affiliated with Visa or MasterCard were the primary providers of merchant services.

Evolution in the Industry

However, as the industry evolved and consolidated, banks gradually stepped away from providing merchant services accounts. Today, a handful of dominant issuers like Bank of America, Chase, Capital One, and Citibank stand out. Smaller banks found it challenging to market this service to businesses due to the complexities involved. Consequently, many banks have outsourced this responsibility to Independent Service Organizations (ISOs). The increasing volume of transactions and businesses has lowered processing costs. To streamline operations, several banks have outsourced these services to larger processors. ISOs handle various aspects, including sales, support, and transaction processing. They establish pricing structures based on percentage rates or flat fees. This shift has made it more affordable for businesses to accept card transactions. When considering a merchant services account, it’s essential to understand your bank’s offerings as well as the reliability of available ISOs.

Advancements in Card Processing

A merchant services account acts as an agreement between the retailer, the merchant’s financial institution, and a processor to settle card payments. This account is the gateway through which businesses can begin accepting consumer card transactions. Once the account is established, a method for processing card payments must be chosen. Traditionally, these transactions involved physical imprints sent by mail or authorized over the phone. This process required two steps: imprinting the card at the time of payment and later processing the transaction.

Simplifying the Process with Electronic Devices

Modern electronic devices have revolutionized this procedure, enabling transactions to occur within seconds. Credit card terminals, commonly found in businesses, serve as standalone devices. Terminals facilitate both swiping and key entry of card information. Any additional data required for processing can also be input into the terminal. Newer terminals extend their capabilities to process debit and gift cards and perform check verifications. For ecommerce platforms, payment gateways play a vital role in authorizing payments. Most merchant service providers integrate third-party gateways for processing. These gateways allow manual entry of credit transactions and can be connected to shopping carts for added convenience. Shopping carts enable real-time processing directly on the website. Other transaction methods are also available, and the choice depends on your business’s unique sales processes in conjunction with your chosen merchant services account provider.


As the landscape of merchant services continues to evolve, the transition from bank-provided accounts to ISOs and the adoption of electronic devices have significantly transformed the way transactions are processed. These changes have made it more accessible and convenient for businesses to accept card payments, catering to the expectations of modern consumers. In an era of technological advancements, organizations must stay vigilant and adaptable to meet the growing demands of a digitally-driven market.

For more insights or assistance in selecting the right merchant services account provider for your business, don’t hesitate to reach out to us.

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