Every business venture must start somewhere. Even agents and ISOs with million—or billion-dollar portfolios spend time getting started managing their first accounts.
This time, you lay the groundwork, learn from trial and error, and develop the skills and experience to shape your unique path to success. Laying the groundwork now helps ensure you enjoy a future earning residual income from clients’ transactions.
In this post, you’ll discover:
- Why research is vital
- What makes merchant profiles important
- How to prospect and build relationships like the pros
- When not securing merchant contracts is the best option
- And much more!
Are you ready to find out how ISOs and agents start building successful portfolios? Let’s get started.
Laying the Groundwork for a Successful Portfolio Through Research
As everyone dreams of success, ISOs and agents want to land million-dollar clients. However, that’s nearly impossible for a brand-new ISO or agent. Fortunately, that can change over time and with effort.
So, where do you start? If you ask some portfolio owners, they may advise you about the importance of starting with a familiar industry. When Warren Buffett, one of the world’s best investors, swears to stick with what’s familiar when investing, you know it’s a safe bet.
Yes, knowing how to operate in the merchant services industry is vital. However, many merchants prefer to work with agents and ISOs who understand client fields like retail, health & wellness, and service-based businesses.
A great way to figure out what industries to target involves asking yourself two simple questions: What do you know? What interests you? Using your educational and work-related backgrounds can let you tap into a world of insights you already have.
If you don’t have professional experience in other industries, your interest in putting in the work and willingness to learn can immediately set you up for success. Often, extensive research is how ISOs and agents start building processing portfolios successfully.
It’s certainly possible to be successful in the payment processing industry by only targeting high-value merchants and industries. Without a decent understanding of the companies and industries you target, you risk making many mistakes and losing interest in your merchant portfolio. This situation makes earning residual income from clients’ transactions difficult.
Defining Your Ideal Merchant Profile
It’s understandable to think that agents and ISOs start building processing portfolios by casting wide nets. Initially, targeting every merchant can sound foolproof. However, this strategy often harms portfolios.
There’s no denying the power of carefully crafted merchant profiles when finding ideal potential clients. However, don’t get too bogged down on this step. Most likely, as your business changes, so will who you target when securing merchant contracts.
Start with a basic profile that outlines the key qualities of your ideal merchant. You can further hone down the merchants you’re looking for based on:
- Product or service type
- Business size
- Average monthly processing volume
- Number of locations
- Openness to changing providers
Taking this vital step long before onboarding merchants can also help you identify red flags in advance, including unstable revenue, poor reputation, frequent chargebacks, or a history of legal trouble. Avoiding dangerous clients helps eliminate roadblocks associated with earning residual income from clients’ transactions.
Prospecting and Building Relationships
After identifying their target merchant profiles, ISOs and agents build processing portfolios by being proactive. Effective prospecting can involve a mix of cold outreach and warm leads. One helpful tip to remember during this time is to avoid overreliance on one channel.
Instead, ISOs and agents that build successful processing portfolios mix things up and look for clients using social media, search engines, personal recommendations, and other sources. As you continue with outreach, you’ll quickly discover where your marketing efforts are paying off the most.
As you find potential merchants, ensure you make a good first impression. It matters. A few ways to start on the right foot when prospecting include:
- Be clear about how your services provide value
- Keep initial messages concise
- Always be responsive
Building an excellent portfolio isn’t primarily about numbers and securing merchant contracts—it’s about building strong, long-term relationships. Agents and ISOs who aim to be trusted advisors rather than providing a service tend to have strong portfolios.
Knowing When to Pass on a Client
In a perfect world, every merchant would yield a goldmine in residual income for an agent or ISO. Unfortunately, that’s not the case. While some companies become top earners, other merchants that perform poorly negatively affect portfolios.
Wanting to sign every business that comes your way is understandable. It’s human nature. However, being selective is a significant aspect of how ISOs and agents start building successful portfolios. For example, use caution when looking into merchants that are:
- Slow to respond
- Constantly switching processors
- Showing poor business results
If a merchant shows signs of being a poor fit, there’s nothing wrong with saying “no.” Don’t think of it as missing out, but as deciding to protect your portfolio’s worth.
Securing Merchant Contracts (and Why It Matters
Securing contracts is one of the most crucial steps in how ISOs and agents start building successful portfolios. This pivotal step involves outlining the following:
- Terms of service
- Termination clauses
- Support expectations
- Fee structures
- Your role as an agent or ISO
This step might seem like nothing more than formalities. However, a well-written and legally sound contract protects all parties while setting clear expectations.
Future Proofing Your Credit Card Processing Portfolio
What’s as (or possibly more) important as acquiring new clients? Keeping the ones you have. There’s no denying the importance of gaining new clients. However, securing merchant contracts and maintaining loyal companies can keep your residual income stream flowing for a long time.
Start building a successful portfolio as an agent or ISO with these tips:
- Stay in regular contact with your clients. Checking in lets you ensure they’re satisfied.
- Helping clients adapt to new technologies or industry-related developments
- Watching for standard churn signals, such as a wave of recent complaints or reduced processing volume
- Optimize pricing and fees to stay competitive
Another crucial tip for future-proofing your portfolio is consistently delivering value. As agents and ISOs hope to see merchants show continual positive performance, these companies look for the same stability in their merchant services.
This kind of advisory approach helps position you as a long-term business partner, not just another vendor. When the competition heats up, agents and ISOs not afraid to go the extra mile will stand out in a good way.
Start Small, Dream Big
Every successful ISO or agent had to start with securing merchant contracts for the first time. It’s what you do next that helps determine how your portfolio grows. Set yourself up for a successful future earning residual income from clients’ transactions by focusing on the fundamentals:
- Research
- Targeting the right merchants
- Building relationships
- Retaining clients
- Committing to quality over quantity
Do you want to learn how ISOs and agents start building successful portfolios? Contact Velocity Funding. We have decades of experience in the merchant services industry, helping our clients grow their portfolios. We also buy portfolios for their maximum value, purchasing about 80% of the portfolios Velocity Funding valuates.
Dean Caso is a Managing Partner at Velocity Funding, which he founded with this company’s other Managing Partner, David Caso, in 2006. Caso graduated in 1983 from Babson College with a Bachelor’s degree in Finance and Investments. With over 35 years of experience, Caso has acquired over 300 credit card processing portfolios. He has a superior eye for opportunity and an unwavering commitment to excellence. Caso’s leadership instills confidence, fosters innovation, and inspires those under his professional command. His decades of industry experience and proven track record of success continue to drive Velocity Funding’s growth and industry-leading presence.