By Adam Atlas
Attorney at Law
A lot happens at payments industry tradeshows. The combination of proximity, spontaneity and chemistry of being in the same hall as hundreds or thousands of payment professionals is often the genesis of great relationships. The purpose of this column is to provide some legal perspective on tradeshows so that you can make the most of them, including your legal strategy.
Trade associations and shows can be a force for good or for bad. The good from a trade association or show is that the industry can learn from its best-in-class models, educate participants about best practices and enjoy a little social time outside of the daily grind of emails, texts and calls.
On the other hand, with much of the U.S. payments industry in one room, there is a chance of collusion. In other words, companies that are supposed to compete with each other and each become more efficient at delivering competing products, may, sadly, do the opposite and agree on ways to lessen competition or fix prices.
This is criminal and can land you in jail. It is therefore important that you not use a tradeshow, or any other exchange with a competitor, as a means of lessening competition in the market that you serve. Lessening competition, in rough terms, means something that would be harmful to the position of a typical customer in terms of price, choice or the availability of the products that you offer.
With so much of the payment market controlled by a handful of legacy networks, one wonders if there are already anti-trust issues lurking in the industry. There might be, but I'll leave that for discussion in another column.
Just because you say something in hushed tones over a drink does not mean that the listener needs to keep it a secret. Before any serious discussion of your business that goes beyond normal public-facing marketing material, it is best to have the party opposite you sign an NDA (non-disclosure agreement). The purpose of such an agreement is to protect the information you may disclose against unauthorized use or disclosure.
For example, if you have a new sales strategy that you plan to use to capture a new market, the sharing of that strategy and market with another entity at a tradeshow should not be done without the benefit of an NDA.
I am perhaps the most trusting attorney around. It sounds like a cliché, but I have seen clients learn the hard way that a seemingly trustworthy party sometimes turns out to be not trustworthy. In any case, serious counterparties will likely think less of you if you fail to ask for an NDA before exchanging important information.
ISOs attend a lot of non-payments tradeshows at which attendees are basically marking their products. Exhibitors at shows are always looking for some special hook to draw in potential clients – like #selfietoast. Toast is great – but false statements about your services are not.
Recent Federal Trade Commission cases involving ISOs remind us that ISOs are held to the same standard as other businesses; they have to be honest about their services and the pricing of their services. If there are termination fees, minimum fees or other fees that are not front-of-mind for the merchant, make sure you can prove that the merchant received disclosure of the fees prior to signing a merchant agreement.
Some potential investors, agents and other parties appear to have a lot going on but don't actually have very much to offer at all. From a business perspective, try to avoid getting carried away by the sizzle of a given potential partner and see what others have experienced with the potential partner.
Tradeshows are great for solidifying relationships and ironing out high-level issues, but not as good for nitty-gritty negotiations and signing deals. The hype and lack of sleep at a show may impair your judgment and hasten your acceptance of terms that might not otherwise be acceptable. Try to get the heavy lifting in a deal done before the show, so that if you sign at the show, you are signing something on which you have already done the requisite research and detailed review.
Tradeshow attendees are a gold mine of information for everyone. In the old days, tradeshow attendee lists were given to all attendees. Now they are no longer distributed and usually saved for the show organizers and sponsors.
This is an unfortunate byproduct of the heavy commercialization of tradeshows where the self-interest of the show trumps the value the show is ostensibly adding to attendees. Anyway, attendees are left having to piece together their own lists of who is at the show.
The only way to make your own attendee list is to be proactive and meet a lot of people. Of course, vendors at booths are also helpful as it is their role to make themselves known to attendees. Thematic presentations are another good way to meet people with similar interests.
The tradeshow is a classic way to get up to speed on industry information. Participants should be careful, however, not to abuse their exchanges with competitors or unwittingly disclose information that is not protected by an NDA. The conference setting is really no different from a regular business encounter – with the distinction that the temptation to exchange with competitors or breach confidences is heightened. The rest is schmoozing, at which most ISOs are simply expert.
In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, seek the services of a competent professional. For further information on this article, email Adam Atlas, Attorney at Law, at firstname.lastname@example.org or call him at 514-842-0886.
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