Steven Vanderford, founder of American Merchant Services and a 15-year payments industry veteran, is concerned about the survival of the merchant level salesperson (MLS). According to Vanderford, MLSs, specifically 1099 agents, are never mentioned, described or articulated as a viable entity in the contracts that Visa Inc. and MasterCard Worldwide sign with ISOs.
"The fact is that our residual streams could be cut off at any time by any ISO, and there is absolutely zero language or contractual obligations to protect the MLS," Vanderford said. "Lately there has been a rash of ISO failures, and the first thing that happens when these ISOs go belly up is nonpayment of residuals to their MLSs. It's happening all the time and there are no safeguards against it. The brands don't recognize us as a separate body from ISOs."
In an effort to gain greater recognition by the card brands, Vanderford and a handful of payment professionals started the Association of Bankcard Professionals in May 2009. The organization is dedicated to establishing stronger legal rights and greater unity for the feet on the street. Vanderford believes MLSs have voiced little concern over these issues, not so much from fear of retribution by their ISOs, but because they are ill-informed.
"Once these ISOs develop the accounts of the merchants the MLSs have signed, there is no portability, which means that, technically and legally, that agent cannot take that account and go to another processor because it now belongs to that ISO," Vanderford said. "Additionally, an ISO can leverage that revenue stream against a loan, and they're doing it all over the place right now."
However, the problem is that after merchants are boarded, it's the performance of the ISO and not the merchant or the MLS that dictates whether that revenue stream stays intact. "If the ISO does not pay back the loan borrowed against that revenue stream, the lender then takes that account and now owns those residuals. What I would like to see are regulations that make it more difficult for an ISO to resurface should they not pay."
The ABP's intention is to provide a resource where comprehensive educational and training materials are available to MLSs. Vanderford feels that without a central, supportive organization for MLSs to safeguard their interests, the payments industry could lose a significant number of talented sales professionals to other industries.
"Historically you had to learn by hard knocks, and then you're at the mercy of whether or not your ISO is ethical," Vanderford said. "Some ISOs are in the realm of being disingenuous, and there are more out there than should be. And to exacerbate the situation, all rules and contract language are enforced solely through Visa and MasterCard. They're the judge and jury, and they are currently not aligned with the distinct needs of the unrepresented MLS."
To get the ABP going while the organization completes its Web site, Vanderford created a forum on the social networking site Facebook for "like-minded" professionals from all sectors of the industry, not just MLSs. "We ultimately hope to be invited to sit down with Visa and MasterCard, as the ISOs and processors are now," Vanderford said. "But in the meantime it's important to work together to achieve our goals ethically.
"I am certainly not against regulation in any form so long as the MLS benefits from those regulations. All the ABP wants is to enjoy a harmonious and respectful relationship with all players in the payments sphere." For additional information, contact Vanderford at firstname.lastname@example.org.
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