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Table of Contents

Lead Story

Payments industry boldly moves forward


Industry Update

FDIC warns banks about processors

IRS backs down on reconciliation requirement

Facebook becoming a payment business

Trade Association News


GS Advisory Board:
Views on IRS reporting and TIN matching

It's time to build your sales force

Marc Beauchamp
Performance Training Systems

An interview with Harold Montgomery

Ken Musante
Eureka Payments LLC

Research Rundown

Commanding retail categories

Minimal (but effective) marketing makeovers

Selling Prepaid

Prepaid in brief

Glitch in Google Wallet raises security concerns

FIs awaken to prepaid's power


Shop small, shop local

Patti Murphy
ProScribes Inc.


Street SmartsSM:
The ins and outs of marketing

Bill Pirtle
C3ET Credit Card Consortia for Education & Training Inc.

Legal strategies for an evolving marketplace

Adam Atlas
Attorney at Law

Modern payment pros fill the knowledge gap

Nicholas Cucci
Network Merchants Inc.

MLSs are masters of change

Dale S. Laszig
Castles Technology Co. Ltd.

Company Profile


New Products

Mobile wallet commerce platform

Apriva Wallet
Apriva LLC


Are you trying too hard?



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

February 27, 2012  •  Issue 12:02:02

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Legal strategies for an evolving marketplace

By Adam Atlas

So the technology world has discovered payments. Specifically, the new world of electronic entrepreneurship, commerce and mobile services is knocking at the door of traditional and alternative merchant acquiring solutions. From the perspective of a lawyer advising ISOs and merchant level salespeople (MLS), here are a few ideas to assist your business strategy now as the marketplace evolves.

Don't get boxed in

Any provider may have what appears to be a near-perfect solution for a given payment channel, such as gift cards or mobile payments. Yet one must question the cost of being exclusive to a provider for a given product. With the right terms, of course, exclusivity is a good bargain for both parties.

However, granting exclusivity to a vendor - without adequate consideration - may ultimately frustrate your business as new sales opportunities come along. For better or for worse, merchants are as fickle as consumers, if not more so. They are apt to switch to the latest gimmick in payments. ISOs should have the flexibility in their supplier agreements to indulge merchants' desire to try new options.

Take title in information

Customer information is the currency of our time. Naturally, under most acquiring sales relationships, the merchant information belongs to the acquiring processor or bank. That said, it is possible to negotiate terms by which an ISO takes some title in merchant information as it relates to products or services. Consider the value of that information and whether you can negotiate some rights in it.

Once you obtain those rights, consider how you may use that information to improve revenue from your portfolio. Obviously, dealing in merchant information requires express consent of the merchants in question. With that consent, an ISO may leverage value in its portfolio that might otherwise go unused.

Verify security standards of suppliers

Together with the increased value of information, ISOs and their suppliers have a corresponding obligation to protect that information. In negotiating contractual terms with all suppliers - from agents, to employees, to information technology service providers - ISOs should consider what obligations suppliers are taking on for securing the information they hold.

Naturally, the Payment Card Industry Data Security Standard applies, as it must. But ISOs and MLSs care about more than just cardholder data. They also care about merchant information, merchant applications, pricing, sales figures and residual reports, which - like a physical inventory in the old world - is the inventory of the new ISO world.

Supplier terms should contain protection for information security. Of course, payment businesses should also secure their own data, whether it resides on laptops and servers or in filing cabinets.

Prepare for paperless

Regarding agreements and applications, ISOs should foresee the transition from paper to paperless documents. When instructing legal counsel on the development of new business agreements, have counsel draft the electronic version of all documents. The cost should be marginal. As electronic documents become the norm rather than the exception, ISOs can hit the ground running when boarding agents, referral sources and merchants without the troublesome paperwork. We must plan for paperless documentation to come to banking, as hard as that is for the old world bankers to fathom.

Make agreements flexible

When ISOs sign new agents, they should recognize that MLSs can solicit for a variety of products beyond merchant services. The drafting of an agent agreement should take this flexibility into consideration. Without running up against the rigorous rules that apply to merchant acquiring, an agent agreement should be flexible enough to allow the ISO to give agents tools to sell products and services other than bankcard acquiring.

Stay informed

The last thing you want is to be educated on a new payment system by your merchant clients. Having a direct connection to millions of merchants, ISOs and MLSs should follow all the twists and turns of new payment products. This enables them to advise merchants on the products' pluses and minuses while competing to be the trusted payments adviser that so many payment professionals are to their merchants.

Be a product tester

When new products emerge, try them out. This doesn't mean you need to buy all the latest terminals. But having test accounts on various payment systems online is a good way to stay in touch with trends in the payments space.

Consider innovating

ISOs and MLSs are very well placed to create their own disruptive payment technologies. Indeed, few startups in payments have payments industry veterans' years of experience in understanding merchant needs.

Such experience is a potentially fertile source of payments business innovation. That said, remember that most great payments ideas go nowhere. So don't waste your time on one unless you are confident it's a winner.

People will always need ways to pay. New ways come along every day. As payment professionals, ISOs and MLSs have front-row seats on the evolution of payments and are well positioned to profit from it.

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 or call him at 514-842 0886.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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