What Is an ISO Agreement?

The document typically covers the commission schedule, when commission is paid, and the conditions for taking it back, known as clawbacks, such as an early payoff or default within a stated window. It also addresses renewal commission, confidentiality, the accuracy of the information the ISO submits, and a non-circumvention clause that bars either side from going around the other to deal directly with its merchants or contacts. Onboarding paperwork travels with it, and the broker receives credentials for the funder’s submission portal.

These agreements drive the economics behind every meeting a broker buys. A merchant introduced through a booked meeting can only become revenue if the ISO has a funder that will take the file, so new brokers usually sign with several funders to match different merchant profiles. Terms are negotiable for larger shops, and experienced brokers read the clawback, renewal ownership, and exclusivity language before they look at the commission rate.

The ISO agreement is not the contract the merchant signs; that is the funding agreement. The phrase also appears in merchant services, where an ISO signs with a sponsor bank or processor and a separate agreement governs its sales agents. Terms vary widely and are not standardized, so no reader should assume one funder’s clauses match another’s. Legal review before signing is sensible, especially for the clawback and non-circumvention language.