ISO Sponsorship Contract Trends

1 Jan

We’ve noted a subtle but decided shift over the past few years in the terms under which acquiring sponsor institutions have been engaging with larger independent sales organizations (“ISOs”).  While the terms of every contract are uniquely dependent on the negotiating leverage of each party, there seems to be a shift afoot in the ISO space.  Thought you’d be interested in the following market trends, styled after the “in” and “out” lists that circulate in the popular press.

 In:  No minimum fee obligations

Out:  Minimum fee or minimum approved merchant production requirements


In:  Portability premiums (ability to transfer merchants upon payment at a specified amount)

Also In:  Pure portability of merchants after the initial term of the contract with no payment for the privilege

Out:  No portability of merchants placed with the sponsor


In:  Termination of residuals limited to specific egregious circumstances, such as ISO fraud

Also In:  No termination of residuals in any instance

Out:  Termination of residuals for breach of contract


In:  Multiple acquiring sponsors

Out:  Exclusivity and ISOs maintaining only one sponsor relationship


In:  Sponsor authorized to pass through Card Network increases and sponsor required to pass through decreases

Out:  Sponsor authorized to change fees charged to ISO and merchants at any time


The number of acquiring sponsors has severely diminished in the last decade.  Even so, the real-world experience of ISOs over the years is resulting in the insistence on more advantageous contract terms.   It will be interesting to see whether this trend continues.  It seems there has never been a better time to strike a favorable ISO deal.

Holli Targan

Attorney & Partner

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