ISO agreement

This is the document the merchant never sees and which governs the behaviour of the person they spend all their time talking to.

What is in it

• Commission schedule: points on funded amount, buy-rate and sell-rate tables, caps on the spread the ISO may add, and how commission is calculated on renewals
• Clawback: repayment of commission if the merchant defaults within a stated early window, or if the deal is bought out or refinanced within a period. This is the single most behaviour-shaping clause in the document
• No agency / no authority: an express statement that the ISO is an independent contractor, is not the funder's agent, and has no power to make representations, quote terms, waive provisions or bind the funder
• Submission exclusivity and non-circumvention: whether a submitted file may be shopped elsewhere, and a bar on the ISO going around the funder to the merchant later
• Compliance representations: telemarketing and TCPA, advertising claims, state disclosure law compliance, licensing where required, data protection
• Indemnity: the ISO indemnifies the funder for claims arising from the ISO's conduct
• Data and ownership: who owns the submission, the merchant list and the renewal
• Termination and residuals: whether the ISO keeps commission on renewals after the relationship ends

Why it matters to a merchant who is not a party

Because it explains behaviour. The no-authority clause is the funder's defence to "but the broker told me". The clawback clause explains why an ISO becomes intensely helpful during the first weeks of an advance and unreachable afterwards — and why a broker whose merchant is struggling inside the clawback window has a direct financial incentive to find them additional funding to keep the payments current, which is one of the routes into stacking.