Going Direct in Payments: How and When to Secure Your Processing Agreement

In this episode, hosts Kevin and Elaina Smith roll up their sleeves to tackle one of the biggest milestones in the payments world: securing a direct processing agreement and an acquiring bank sponsorship.Whether you’re pondering the shift from sales-driven retail to a more wholesale, operational model—or you’re just curious about what it really takes to get your own BIN and board merchants directly—this conversation takes you through the practical realities, financial implications, and operational readiness you’ll need to make it happen. You’ll get firsthand insights on when to consider going direct, common misconceptions about profitability, and the critical elements banks look for before handing over the keys.Plus, Kevin and Elaina don’t shy away from the fine print. They break down the structure of processing agreements, minimums, reserve requirements, and those sneaky extra fees—from kilobyte charges to compliance reporting. You’ll also hear their candid takes on building your underwriting, risk, and accounting teams, and why operational expertise is make-or-break for this next phase of your business.If you’ve ever considered the leap into direct processing—or want to understand why so many ISOs struggle with the transition—this episode is packed with actionable advice, cautionary tales, and a few rants about the realities behind the numbers. Chapters (00:00:04) - Do You Need To Get Your Own Payment Relationship?(00:04:28) - What is a Direct Processing Deal?(00:06:17) - How to Get Your Own Bank Card(00:11:09) - Processing Agreement(00:13:41) - Do Minimum Interchange Rates Affect Business?(00:16:04) - What are the implications of elevator clauses in processing agreements?(00:18:39) - Payment processing agreements, service offerings(00:22:48) - Negotiating an Issuance Agreement(00:24:10) - What are we going to need for a direct-processing merchant?(00:30:19) - Direct Processing Advice