The Green Sheet Online Edition
October 22, 2007 • Issue 07:10:02
The next ISO widow could be yours
Mrs. ISO, a widow, told me the following story: Her husband, Mr. ISO, worked with a well-known payment processor. She had basic knowledge of the business but, like many spouses of merchant acquiring business owners, she knew far less than her husband did.
When Mr. ISO found out he did not have long to live, he met with his processor to discuss what would happen to his merchant portfolio after his demise. The processor assured Mr. ISO it would do what it could to give value from Mr. ISO's portfolio to Mrs. ISO.
When Mr. ISO passed away, Mrs. ISO did her best to take care of the merchant portfolio.
Soon, she noticed that a merchant level salesperson (MLS) who had been close to Mr. ISO was re-signing _ with the same processor _ merchants from her portfolio.
She brought this to the attention of the processor. Recalling its promise to the late Mr. ISO, the processor agreed to pay Mrs. ISO a nominal override on all the accounts the unscrupulous MLS had re-signed.
Nonetheless, the override was very small compared to the actual residuals on the accounts.
On behalf of Mrs. ISO, I contacted the processor to discuss the situation. An executive took my call and told me the processor allowed MLSs to re-sign merchants who were already processing with the company. As such, the re-signing of Mrs. ISO's merchants by Mr. ISO's former colleague was not a breach of the turncoat's obligations to the processor.
The executive reiterated the company's willingness to pay an override on the accounts that were re-signed. I asked that the offending agent be encouraged to return the re-signed merchants to Mrs. ISO's portfolio. That was weeks ago; I have not yet heard back from the processor.
Draw the line
It's one thing for the portfolio of an ISO widow to shrink through attrition, as all portfolios eventually do. It's another thing for the processor to allow one of its agents to pick off merchants from a surviving spouse's portfolio. (In this article, "ISO widow" includes widowers, too.)
Our industry is known for being ruthless. However, aggressive attitudes must be set aside when examining the circumstances of an ISO widow.
As we all know, the spouse of an ISO rarely has the know-how or the extraordinary drive that it takes to operate an ISO.
Moreover, regardless of whether an ISO widow knows how to operate the business she inherits, the period directly following the passing of one's life partner is not a time when anyone should have to worry about providing paper rolls to merchants.
Grieving spouses should be able to take comfort knowing others in our industry will protect their interests until such time as they are able to decide how to resolve their business affairs.
Have a heart
I appeal to everyone in our industry to pay special attention to those left behind when an owner of an ISO dies. Many ISOs and MLSs are family people who work hard to support their loved ones.
Our industry is difficult to understand even for those who have worked in it for many years.
It is that much harder to grasp for someone who has been thrown into it because a spouse has passed away.
As I did in the case of Mrs. ISO, I offer my services free of charge to any ISO widow. I invite other advisers to make the same offer so ISO widows will always have people to help them deal with the complex businesses they inherit.
It is my hope that the card Associations, banks and processors will use their tremendous power to assist these individuals. They are the most vulnerable to the abuse that is commonplace in our cutthroat marketplace.
Of course, from a legal perspective, preparations should be made for the death or disability of an ISO. Those preparations include, but are not limited to, the following:
- Have a valid will.
- Include succession clauses in the ISO agreement.
- Groom a successor.
- Consider an automatic buyout on death or disability at a pre-arranged price.
However, these legal precautions will be either ineffective or too costly to enforce if the rest of us do not make a
personal commitment to attend to the needs of ISO widows.
Because our industry is really a small community, I believe it will not be difficult for us, as a whole, to make the commitments I have suggested.
As for Mrs. ISO, we have yet to find out to what extent the processor will give her the full value of the portfolio, which is what her husband wanted her to have.
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, e-mail Adam Atlas, Attorney at Law, at firstname.lastname@example.org or call him at 514-842-0886.
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