Direct Credit Card Processing

Direct Credit Card Processing

A misleading diagram is becoming more popular on payment provider websites. It’s a “direct credit card processing” or wholesale credit card processing” diagram, which shows two different options for securing a credit card processing solution. One option is through their company: a simple path where they connect you right to the card brands, often called direct processing. The other option is the more complicated route they say you can expect with their competitors: a multi-step process cluttered with middlemen.

It looks something like this:

Direct credit card processing diagram

The path that shows a shorter, more direct route from you to the credit card companies implies that the company offers a simpler, direct credit card processing choice, often hinting that you can save money since their company connects you directly to the credit card brands. Looking at the diagram, it’s easy to think that you’d want to choose the company with fewer “middlemen” because direct processing must be better.

The problem is, these diagrams aren’t accurate.

Let’s take a look at the “extra” steps on the more complex path and get to the bottom of the “direct credit card processing” diagrams.


The “Sales Reps” Step

The first “extra” step is for what the diagrams call “middlemen” or “sales reps.” These are the people who set you up with credit card processing for your business. How is that different than getting set up with a representative at the company on the simpler path? Good question. It’s not.

When you sign up for credit card processing with the company who posts the diagram, you’ll still work with a sales rep or account rep who will provide paperwork for your account and help you with the setup process. Refusing to label that as “sales reps” makes it look like another step for the more complicated path.

For all intents and purposes, we could relabel “sales rep” on the complicated path with the name of a competitor, or simply add “sales reps” to the bottom path. In either case, you’re working with the company to enable your business to accept credit cards.

Furthermore, the card brands (with the exception of American Express) don’t set up processing accounts for individual businesses. They have relationships with acquiring banks. There’s no “cutting out the credit card processing middlemen” to go direct to the card brands, because the card brands don’t do what the “middlemen” do.

The “Processors” Step

Most of the companies that post these kinds of diagrams are called independent sales organizations (ISOs.) They are not processors themselves. All ISOs resell the processing services of a larger “backend” processor. Essentially, an ISO and a processor go hand in hand.

It’s possible to work directly with a backend processor and not go through an ISO, but it’s not possible to work with an ISO and skip backend processors. If you sign up for credit card processing through an ISO, there is a backend processor involved, even if you personally don’t speak to them or even know which one it is.

No ISO can claim it eliminates a processor from the steps, because the ISO handles your credit card transaction through its backend processor partner.  

There are several backend processors, such as:

  • Elavon
  • First Data
  • Global Payments / Heartland Payment Systems
  • TSYS / TransFirst
  • Vantiv / NPC
  • Worldpay

These companies would be able to claim that there’s no other processor involved in your transaction. So if a “direct processor diagram” isn’t posted by a company such as Elavon, First Data, Global/Heartland, TSYS/TransFirst, Vantiv/NPC, or Worldpay (with their name or logo in the bottom path) excluding the “processor” step is more marketing than fact.

But, interestingly enough, none of those companies use the “direct processor” diagram.

check mark  Related Article: How Credit Card Processing Works.


The diagram is always posted by ISOs, or companies that partner with processors to handle your credit card transactions. As mentioned above, ISOs do not go “direct to credit card companies” and they always have at least one backend processor that they work with. That means we have to add the “processor” step to the bottom path.

So in reality, the diagram should look more like this:

Wholesale credit card processing diagram

The “direct credit card processor” diagram starts to look a little redundant. That’s because many ISO can and do use the same few backend processors. Companies that post this diagram are using it as a marketing tactic to differentiate themselves from the competition.

Credit card processing is a very competitive industry. Companies try many different tactics to distinguish themselves, and this one appeals to some business owners.

ISOs vs. Backend Processors

I mentioned earlier that there are several backend processors, and that it’s possible to get credit card processing directly from them, without using an ISO. You may be wondering if there’s any benefit to that, correctly thinking that backend processors would be the less complicated path in the diagram, since they handle both sales and backend processing themselves.

The answer is, it depends. There are times when going directly to a processor can be beneficial, but ISOs can often provide the same or better pricing, and may even offer better customer service since they’re usually much smaller companies.

The easiest way to decide what you need is to compare directly. You can use CardFellow to see pricing from direct, backend processors and from ISOs. You can even invite more companies to place quotes for easy comparisons. It’s free, private, and no obligation. Give it a try.

How do I find out if a company is an ISO?

All registered ISOs are required to post a disclosure on their website stating with which acquiring bank(s) they’re registered. Scroll to the very bottom of the company’s website and look for wording like “Company X, LLC is a registered ISO of Wells Fargo Bank.”

Companies that don’t include an ISO disclosure are not registered with the credit card brands and may not be your best bet for processing.

The Bottom Line

The bottom line is that any payment provider (whether an ISO or one of the backend processors) has the potential to be the “best” solution for your business. But it isn’t because of direct connections to credit card brands or elimination of sales reps. Rather, the “best” solution for you will be the one that’s the right mix of low cost, good service, and compatibility with the systems you want to use.

Take advantage of CardFellow’s free comparison tools to find the best credit card processing solution for your business.

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