Anyone with a mailbox or a television knows that marketing is a huge part of the credit card business, and large credit companies like Visa, MasterCard, and American Express spend millions of dollars each year telling their customers (and potential customers) the many benefits of choosing a credit card sporting one logo or another. In 1958, Bank of America started a lasting trend by mass-mailing credit card offers to just about every resident in the city of Fresno, California, making it easier than ever for Americans to get credit cards, but also revolutionizing the concept of “junk mail” forever.
What may be less obvious to the average American is the role that credit card processing companies play in the payments industry, and the way in which they market their services to merchants. These service providers equip merchants with online merchant accounts, which are special bank accounts that allow the merchants to accept credit card and debit card payments. Most credit card transactions are sent electronically to merchant processing banks, which authorize, capture, and deposit credit transactions. A business’s online merchant account serves as an agreement between the business itself, the merchant bank that issues the cards, and the payment processor that handles the credit transactions.
Online merchant accounts are marketed to business owners and managers in one of two ways. Some are marketed directly by sponsoring banks or payment processors. The other basic method is to go through an authorized agent who represents the bank and who is registered as an Independent Selling Organization / Member Service Provider (ISO/MSP) with both the Visa and MasterCard credit associations. These associations have set regulations for marketing details which ISO/MSPs must follow, or face penalties and fines.
Visa and MasterCard member banks can issue online merchant accounts directly to merchants, but many banks only serve local businesses with physical storefronts. ISO/MSPs often offer more flexibility to merchants, but still must be sponsored by a member bank that verifies the financial stability and suitability of the ISO/MSP.
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