The world is becoming increasingly autonomous. All the businesses and its dynamics are shifting towards an open source internet. It has already been predicted that due to advancements in block chain and online direct peer-to-peer sharing will be the end of the banks as we know it. It is the end of the mediator, the end of bureaucracy, and an end to the middle man.
But what about ISOs? Independent Sales Organizations have long since acted as middlemen who take care of the credit card transactions of businessmen with tie-ups with banks. If the banks end, would ISOs too?
Absolutely not, in fact, this period of transition in the world can also be a way for ISOs to transition into something else entirely. Essentially, many merchants that are seeking ISOs to attain Merchant Cash Advance directly from them and use their already established network of credit card transactions and bank tie-ups to fuel their businesses. And doing so, cutting out paying extra to the lenders, as now ISOs are becoming lenders themselves!
And so, in this article, we will try to understand the functioning and the rising trend of this brave new world that awaits all of us. And if you are an ISO worried about the shift towards cryptocurrencies like Bitcoin, then you don’t have to worry anymore because here are all things you need to know to make the shift yourself.
ISOs and MCA
Merchant Cash Advance and ISOs have had a long relationship ever since the foundation of the very concept. To give a general backdrop, a MCA lets business owners receive large sums of money in exchange for a portion of their future credit card sales. Essentially what the lenders are buying is money itself, but it comes in small packages over time with every transaction the business owner’s customer base makes. And for this reason, both the lender and the debtor are merchants that are seeking ISOs.
As ISOs take care of the transactions, making sure that the lender receives their portion while taking some of the commission for themselves as well. But the problem with this method is that the business owners never truly rely on the lenders; as they are third party individuals who do not actually do anything but provide the initial investment to the businesses.
And this system is not essential as profitable for ISOs either as they only get a small portion. And so, the ISOs are starting to become the lenders themselves, while taking care of the transactions. As a result, merchants that are seeking ISOs do so now instead of choosing independent lenders.
Advantages of ISOs who become MCA lenders
Here are a few advantages that ISOs have on becoming the lenders themselves.
- Trust: ISOs already work with business owners and take care of all their daily transactions already. And with this wide network, a form of trust is already established between both parties.
- More profit: If the merchants and the ISO cut out the lender, the ISOs receive much more profit than it would take care of transactions for the lender. And the merchant will also be happy as it would save him/her money too.
- Block-chain transition: Block-chain is a way of keeping records with absolute truth. It is unbreakable and cannot be convicted of fraud. If ISOs move to block-chain as the merchants do so, the transition will be smooth and will cut out the role of banks as well. Hence, creating a direct clean route for merchants and ISOs to function with much more freedom and make more profit.
And so, that is why many more merchants are seeking ISOs because dealing directly makes much more sense and is much better for both the parties.