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Table of Contents

Lead Story

Talking the talk

Patti Murphy


Industry Update

Wal-Mart ends Visa debit moratorium in Canada

Ecommerce drives global economic growth

Double-digit growth in 2016 holiday spend

Frost & Sullivan probes cybercrime in APAC region


Mobile augments shopper loyalty

Lane Conner


Payments' accidental ecosystem

Dale S. Laszig
DSL Direct LLC

In defense of processor increases

Steven Feldshuh
Merchants' Choice Payment Solutions East

2017: Three predictions and a little advice

Evi Triantafyllides


Street SmartsSM:
Mind your mental health

John Tucker
1st Capital Loans LLC

One merchant's brilliant solution for shopping cart abandonment

Chris O'Donnell
Instabill Corp.

ISO portfolio seller's checklist

Adam Atlas
Attorney at Law

Company Profile


New Products

Driverless, multifunctional, networked check scanner

RDM Corp.

Unplugged, portable, touch screen POS

StealthTouch II
Pioneer Solution Inc.

Mobile ACH, check deposit services



Let new ideas flow


Letter from the editors

Readers Speak

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

January 23, 2017  •  Issue 17:01:02

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Legal ease:
ISO portfolio seller's checklist

By Adam Atlas

Having advised on a number of ISO portfolio purchase and sale transactions, I thought it would help to outline key items for an ISO portfolio seller to consider before, during and after a sale. For the purposes of this article, I will assume that the selling ISO has already weighed the advantages and disadvantages of selling.


Every portfolio buyer must conduct due diligence before buying. Even with the most honest of sellers, buyers still owe themselves a duty, and may also owe their investors a duty to fully review the books and records of the portfolio being purchased to see that they are going to get what they are paying for.

Due diligence for ISO acquisitions often involves the seller showing the buyer information related to the portfolio and ISO agreements, such as residual reports, merchant agreements, etc. Taking a careful look at the ISO agreement, the selling ISO will see that much of that information (particularly the ISO agreement) is confidential and cannot be disclosed without permission of the processor that is a party to the ISO agreement.

Before engaging in in-depth due diligence with the buyer, the selling ISO may have to obtain permission from the processor to disclose information to the potential buyer. Getting this permission is not usually a problem, but pressing ahead with due diligence without permission may result in the processor alleging breach of the ISO agreement, which would put the residual sale in jeopardy.

What's for sale anyway?

In decreasing order of substance, here's what an ISO may be selling as part of selling an ISO business:

Terms of sale

When selling an ISO business or portfolio, the key consideration beyond purchase price is how quickly that price will be paid and on what conditions. Buyers will pay more when sellers will wait longer to receive the purchase price. Similarly, buyers will pay more for portfolios that decline in value more slowly. Specifically, if the residuals purchased by the business don't decline substantially, the seller is more likely to receive the highest purchase price available.

Some sellers will refuse to wait for any part of their purchase price. This places the buyer in the position of having to trust (or bet) on the seller's honesty and the strength of the business purchased. Naturally, the seller will expect a lesser purchase price but will also be relieved of having to meet post-closing performance guarantees.


No buyer wants to see the value purchased disappear. Consequently, purchasers will require sellers to agree to not solicit the merchants they have sold for some years after closing. For an honest seller, this is not controversial. However, even honest sellers are put to the test when merchants call after closing complaining the buyer's service is sub-par or they simply prefer working with the seller.

Sellers should take the long view and not ruin a chance at a purchase price payout simply to place a few accounts from the sold portfolio. Similarly, buyers need not take an excessively harsh view of sellers who are approached by merchants from the portfolio sold. Perhaps buyer and seller can take advantage of the relationships between those merchants and the seller for the good of all parties.

Many purchase scenarios involve the seller becoming an agent of the buyer, making it easier for the seller to keep supporting the portfolio sold and renew the accounts in that portfolio for the benefit of both parties.


Non-competition means the seller will not be involved in the ISO business in a defined place for a specific amount of time. A non-competition covenant is not usually given by a seller unless the seller is willing to be out of the ISO business for a specific amount of time and the seller is given additional compensation for not competing.

To be clear, non-competition is not the same as non-solicitation. A seller bound by only a non-solicitation clause can continue to be involved in the ISO business, provided the seller does not harm the buyer's portfolio.

A seller that is also bound by a non-competition clause will likely have to find another line of business for the non-competition period. That kind of promise usually comes at a price for the buyer.

There are, of course, many other considerations for ISO sellers, but those discussed herein are key.

In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. For further information on this article, please contact Adam Atlas, Attorney at Law via email at or by phone 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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