For at least the last 15 years, it seems there has always been someone ready to write a eulogy for independent sales organizations (ISOs).
The exact cause of ISOs’ predicted death changes every few years depending on what is going on in the payments ecosystem at the moment, First American’s Vice President of Strategic Partnerships John Newton told PYMNTS in a recent conversation.
At various industry events over the years, Newton has heard PayPal will be the end of ISOs, Square will be the end of ISOs, Stripe will be the end of ISOs — and, most recently, the ISO apocalypse has been attributed to the mergers and acquisitions (M&A) extravaganza that has marked the processor space in the last 12 to 18 months.
That’s not to say the great reshaping of the merchant services chessboard that is currently underway has not been important or impactful. Fiserv merged with First Data, TSYS merged with Global Payments, and FIS bought Worldpay — three moves that, in effect, made the processor world a much smaller place, populated by some extraordinarily massive players. ISOs have to be prepared to adapt to the landscape that is unfolding around them.
“For a lot of ISOs that are selling traditional and somewhat canned products and services, there has been some hesitation, because this is their livelihood,” Newton noted. “ISOs whose processors have recently merged or been acquired must ask: ‘Will we be as valued? Will we have the same cadence of new products to offer? Will there be a new focus that will shift away from ISOs as a distribution channel?’”
Those are big — and important — questions, he noted, given the risks ISOs perceive to their future in a merchant service environment that has changed tremendously and is likely to change even more. But, said Newton, ISOs are at their core entrepreneurial entities that are wired to adapt and are evolving to meet the changing times — primarily by reimagining their business model and reshaping their relationships with technology providers.
