A Thing
The Green SheetGreen Sheet

The Green Sheet Online Edition

June 12, 2023 • Issue 23:06:01


By Ken Musante
Napa Payments and Consulting

I am an ordained minister. This past month, I had the honor of a lifetime: I presided over the services to consecrate the nuptials of my daughter and son-in-law. It was a beautiful weekend, exceeding expectations. Marriage is a partnership. A commitment and a vow not to be taken lightly.

Like some couples at the altar, too often merchant services professionals sign agreements without understanding the terms, resulting in expensive and painful separations. Merchant services professionals should understand the document and partner they are committing to.

Love is a necessary but insufficient component for a successful marriage

Payments professionals should love their partners, but love is not enough. Unless both parties work at the relationship—every day—it will be unfulfilling. To make that type of commitment, you need to understand your partner and your obligations.

All too often, contracts have a minimum requirement of deal count, and if that deal count is not achieved, pricing changes. While I could understand a tiered pricing schedule based on volume, having a minimum deal count is not an equitable relationship; it's indentured servitude, which has no place in a merchant services contract.

Double coincidence of wants

In a good relationship, each party wants the other's happiness and willingly sacrifices some of their own for the betterment of the relationship. Errors should have cure periods and allow for rectification. There is no place in our industry where contracts should allow for termination, without commission, for small errors. Check your contracts and ensure all residuals survive termination with very limited exceptions.

Any indemnity clause should be mutual, and the prevailing party should be entitled to any and all legal fees. The processor should not ask a partner to sign on to any indemnity they are not willing to also commit to.

Merchant services professionals should have months to review their residual reports and to identify errors. Limiting the time to 90 days or less invites sloppiness on the processor's part. After all, it's their reporting, and it sometimes takes months to spot a trend. If reporting is erroneous, they should make good on the error. At a minimum, this time frame should be six months.

Sometimes all you have are two people committed to the commitment.

Relationships will encounter difficult periods. If both parties are committed, it will survive and flourish. Prenuptial agreements can be used by one party to dictate actions and lead to an unbalanced, resentful relationship. Likewise, any agreement that allows for Schedule A to be unilaterally modified should be torn up.

I can understand a situation where the pricing may be raised in line with an increase in costs, but to allow the processor to unilaterally change Schedule A is unconscionable. Any contract that allows for such is valueless.

Optionality is never bad

In a relationship, each day you may wake up and can choose to love your partner. Having that optionality is healthy. My wife reminds me there are two people who have her unconditional love and I am not one of them. Remembering the love we have for each other and choosing to honor that love with fidelity strengthens our relationship.

Merchant services professionals should never sign an exclusive contract. A merchant services professional may choose to send deals exclusively to one processor, and that may be the best option at the time, but they should not be contractually obligated to exclusivity.

As I shared, I am an ordained minister. The ceremony I performed for my daughter's wedding was legally binding. I am not an attorney, however. I encourage you to consider the points I've made with a qualified industry attorney as you contemplate the disparate meanings of this article's title. Godspeed. end of article

As founder of Humboldt Merchant Services, co-founder of Eureka Payments, and a former executive for such payments innovators as WePay, a division of JPMorgan Chase, Ken Musante has experience in all aspects of successful ISO building. He currently provides consulting services and expert witness testimony as founder of Napa Payments and Consulting, www.napapaymentsandconsulting.com. Contact him at kenm@napapaymentsandconsulting.com, 707-601-7656 or www.linkedin.com/in/ken-musante-us.

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