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The ISO/Agent Relationship: What's the Deal?

By Adam Atlas

Any ISO will say that partnering with agents is a key factor in building an ISO business. Most people in the bankcard industry started out working as an agent; itherefore most know what that life is like.

Following are some important aspects of the ISO/agent relationship that I have observed in negotiating dozens of agent relationships and disputes.


Most agents have a story or two of how they have been burned in this business.

Some take ISO status as their opportunity to inflict the dishonesty they have suffered on others. This is the wrong approach. Graduating to ISO status is an opportunity to build a lasting and reputable name for yourself.

News travels fast in the industry. If you are an ISO with dishonest business practices, this will come back to you in the form of low agent and merchant retention and possibly lawsuits for unpaid compensation.

There is a fine line between being shrewd and dishonest. Where you draw that line is your decision. I recommend an abundance of honesty in dealing with agents.

Regardless of all the noncompete and nonsolicitation clauses in your agent agreements, agents probably know your merchants better than you do. Act accordingly.

Liability Allocation

Most agents carry no liability; however, if agents do something wrong, such as cause you to be liable for a card Association fine or breach a noncompetition clause, then agents should expect to be liable.

Zero liability for agents means zero liability for wrongs of the merchants, such as fraud and chargebacks.

Agents should not expect to never be liable for any amounts to the ISO, especially if they handle important customer information. Make agent agreements clear on how liability is allocated.


Nearly every ISO with whom I speak is concerned about residual protection. Agents have the same preoccupation. However, given that agents do not generally carry risk, they should not expect the same level of residual compensation protection as an ISO that does carry risk.

For example, when your agents provide false information to merchants for which you are found liable, do not expect to loose all your residual income because of one wrongdoing.

However, agents should expect to loose all their income if an act was unambiguously deliberate and misleading. Just as ISOs are advised to be fair and honest, so are agents.

Training and Support

In some Asian cultures teachers are blamed when students perform poorly. Similarly, as an ISO with agents performing poorly in the field, do not assign blame only to agents.

You have a general obligation to assist in the training of agents. This is not only because the ISO agreement probably obliges it but also because it makes good business sense.

Agents are extensions of your business; they are the principal point of contact for many merchants.

They need to be good salespeople, and they need the training and support to provide quality customer service to merchants during and after the signup process. Look to your processor or bank for assistance in training agents.


Every salesperson has his or her way of selling. However, as an ISO you are building a corporate identity and standard.

You owe it to agents to create a method by which they sell that is consistent with their personal style and your corporate identity.

Some ISOs have call centers that sell 300 merchants a month; others have a team of salespeople who close 20 large accounts per month.

Fortunately, enough merchants are out there to suit a variety of sales methods. Pick one that works for you, and stick with it.


ISOs should know what their agents are doing. You have obligations to your processor and bank as to the type of merchants agents solicit.

Agents should not invest time in merchants whom you cannot submit to the processor or bank.

Monitoring of agent activity is an important part of remaining compliant under the ISO agreement.


I am a firm believer in straight talk about exclusivity. When an agent is exclusive to you, this means that the agent cannot submit deals to any other ISO, processor or bank unless the agent has first submitted the deal to you.

If agents are not exclusive, they may send any given deal to any of the ISOs for which they work.

A lot of agent (and ISO) deals paint a fuzzy picture on the subject of exclusivity. Clear up any ambiguities on this topic in agent agreements.

Get It in Writing

While some agent agreements are effective with a handshake, I recommend putting them all in writing if only because the card Association rules require it.

Sharing Agent Information

Next to merchant information the next most valuable commodity in this industry is agent information. This information is valuable because ISOs like to recruit agents working with other ISOs.

Always limit the distribution of your agent list and information concerning these agents. As the card Associations tighten controls on agents they will also require more reporting of agent identities to banks.

However, don't let the bank abuse this reporting obligation and turn it into an obligation for agents to contract directly with the bank or processor.

Remember, agents are only good for an ISO as long as they work for that ISO. Working for the processor or bank above the ISO invites problems of loyalty.


Inform everyone concerned when an agent is no longer an agent. If you terminated an agent on a given day, immediately notify the processor that that agent is no longer your agent.

Failure to report these important changes may result in your being liable for faults the agent committed after he or she ceased being an agent.

Most merchant accounts are opened because of agent solicitation. The agents are the engines of this industry. They are like the locomotives on a train; they need both fuel and control to produce the best results for all.

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 or call him at 514-842-0886.

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