How to start a merchant services company: from zero to launch

Are you interested in helping businesses grow by enhancing their payment capabilities? Then, starting a merchant services business may be the perfect path for you. However, the journey towards industry leadership is strewn with obstacles, and making mistakes as a newcomer can be costly.
This guide walks you through everything you need to launch a merchant services company – let’s dive in.
We’ll start with the basic terminology every aspiring merchant services professional should know.
Merchant services are a jumping-off point for every business, enabling them to accept different payment methods, handle multiple currencies, and manage transactions. Partnering with a merchant service provider allows companies to expand their payment options and enter new markets with minimal effort. Such clear advantages generate a great demand for merchant services among businesses of different industries and sizes.
The payment industry is one of the most vibrant and fast-growing corners of the financial world, expanding at a projected rate of around 13.9% between 2024 and 2029. Becoming a merchant services provider gives you access to a diverse client base – from local coffee shops to global e-commerce brands – and a revenue model built on residual income from every transaction. With a loyal client base, those fees become a steady, long-term income stream.
Before you become a merchant processor, decide your role in the payment ecosystem. There are three merchant services business opportunities you can consider.
An Independent Sales Organisation (ISO) or Merchant Service Provider (MSP) acts as a reseller of merchant accounts and payment processing services, partnering with an acquiring bank or large processor. It markets to merchants, guides them through onboarding using the processor's systems, and provides support – but doesn't handle transactions itself.
The processor manages payments, settlements, and risk, while the ISO/MSP earns commissions or residuals from merchant fees. Because it doesn't directly process payments, the ISO/MSP avoids liability for fraud and chargebacks.
A PayFac is a "master merchant" that can quickly onboard sub-merchants under its own account. Unlike an ISO, it directly underwrites, approves, and manages merchants, handling onboarding, risk checks, transaction processing via its own tech, and settlements.
This model offers greater control and higher revenue per merchant but comes with higher costs, greater compliance burdens, and full liability for sub-merchants' activity. Stripe, Square, and PayPal are well-known examples.
The full processor or acquirer sits at the top of the chain, connecting directly to card networks, processing payments end-to-end, and holding merchant funds. It retains the full processing fee (minus card network costs) and controls pricing and policies. However, it demands strict compliance, significant capital, and large-scale infrastructure – making it a goal for established companies rather than a typical starting point.
Ready to enter this lucrative niche? Learn how to start a merchant processing company in just five steps.
Your company’s success depends on thorough research before launch. Stay up to date on payment trends, security protocols, and emerging technologies.
Pay close attention to industry competition. Usually, the bigger providers get more prominent merchants. However, it’s easier for smaller merchant service providers to get local clients on board.
Depending on your location, you may need licences to operate as a merchant services provider. Research local requirements, obtain the necessary permits, and stay compliant to protect your business and customers. PCI DSS compliance is crucial for every organisation that interacts with sensitive payment data.
Based on the preferences of your target audience, determine the services that cater to their business needs. This may include traditional point-of-sale systems, payment gateways, online shopping cart integration, and merchant account assistance.
Partnering with banks and PSPs is crucial for your merchant services business success. Look for business partners in your area and contact them with a proposal for cooperation. For starters, it may be just one acquiring bank or payment processor. The more time you are in the industry and the more clients you acquire, the faster your network of partners will expand.
In a crowded market, financial expertise should be your hallmark. Few startups can hire a full professional team at launch, but even a small group of knowledgeable people can drive success. Hire those who understand the industry and are committed to your company’s growth. The sales team will actively reach out to businesses, showcase the benefits of your services, and close deals.
When looking at how to start a merchant services company, remember that breaking in without an existing payment network or merchant base can be challenging. Focus first on securing a few initial clients – this will give you credibility, real feedback, and a foundation to grow from.
Use those early wins to research your market, understand merchant pain points, and refine your offer. Position yourself not just as a provider, but as a trusted payment consultant who helps businesses find the right mix of solutions for their needs.
Build momentum through:
Online channels like SEO, targeted ads, and a strong social presence can bring in merchants who are actively looking. When presenting your offer, clearly demonstrate the value they’ll gain – such as higher approval rates, reduced processing costs, streamlined operations, and increased revenue. Show them the tangible return they can expect from partnering with you.
If you decide to work with Corefy, we’ve developed an interactive ROI calculator you can use both to assess the benefits of our solution for your own business and to create tailored projections for your leads.
There are two ways to start working as a merchant services company: from scratch or with a white label solution.
Starting a merchant services business from scratch requires a lot of time and money for tasks like developing software, getting licenses, forming partnerships, and attracting clients. It also involves a substantial upfront investment in a development team, card network fees, and hardware.
If you're on a tight budget and want to become a merchant processor quickly, a white label solution is a simpler choice. Let’s find out which benefits and pitfalls lie behind the white label solution for aspiring merchant services businesses.
Running a merchant services company requires a unified, customisable infrastructure that works for your merchants and frees your team from manual, repetitive tasks. That’s exactly what our PSP client from Eastern Europe achieved after switching to Corefy, moving from a basic gateway setup to a complete white-label payment ecosystem.
Here’s what they got:
Starting a merchant services business is a long row to hoe, but with the right approach, you can encounter far fewer challenges. Instead of starting all processes from scratch, you can take your place in the market much more easily and quickly with a reliable white label provider.
Understanding the needs of aspiring merchant service providers, we’ve built a scalable payment platform with cutting-edge tools, allowing you to run a business under your brand without the burden of development and huge costs. Provide advanced merchant services for online businesses within a few weeks, having 500+ connections established for you.
You don’t need to build a platform from scratch. Many start by partnering with a white-label payment solution like Corefy or working as an ISO. This lets you offer merchant accounts, gateways, and support under your brand, while we handle the tech, compliance, and processing. You focus on sales, onboarding, and relationships – without the cost or delays of in-house development.
Licensing requirements vary depending on your business model and location. If you act purely as an ISO, you typically don’t need a money transmitter license, but you must register with card networks via your acquiring bank. If you operate as a Payment Facilitator (PayFac) or hold customer funds, you may need additional licenses such as state Money Transmitter Licenses in the U.S. or a Payment Institution license in the EU. Always check local regulations before launching.
A Payment Service Provider (PSP) offers merchants a full suite of payment services – onboarding, payment gateway access, and connections to multiple acquiring banks or processors – often via a single integration. A merchant processor (or acquiring bank) is the financial institution that processes transactions, settles funds to merchants, and holds direct relationships with the card networks. PSPs typically sit between merchants and processors, offering flexibility and additional features without merchants needing to contract with multiple banks.
Earnings depend on your model, portfolio size, and pricing. Most providers earn residual income – a percentage of each transaction’s processing fees. For example, if you retain 0.20% of your merchants’ processing volume, a $1M monthly portfolio would yield about $2,000 in recurring monthly revenue. As you add more merchants and volume, your residuals can scale significantly, and value-added services (like fraud tools or analytics) can boost profitability.