rom time to time, at the beginning of a negotiation with a semi-experienced sales organization, I hear "I want my own BIN and ICA" or "I need merchant portability." Rarely, however, are either of these statements fully thought through.

Portability without a Bank Identification Number (BIN) and Interbank Card Association (ICA) control is a misnomer. Moving a large number of merchants individually leads to merchant attrition, or it forces the acquirer to grant pricing concessions either to the merchants or to the next acquirer accepting the merchants. Individually, merchants are not portable; making them so inevitably decreases a portfolio's value.

BIN and ICA control will allow for mass movement of merchants if the ISO/acquirer contract is structured correctly. Doing this requires careful planning. As an ISO, when considering BIN and ICA portability, the first thing to understand is that you need both the BIN and the ICA to allow for a portable portfolio. I won't get into the details, but controlling only the BIN or only the ICA is similar to moving only the Visa processing and not MasterCard's. Obviously, this is of little value.

Next, only a financial institution and principal member can own a BIN/ICA. Asking for BIN/ICA ownership at the agreement's termination is not plausible. Likewise, receiving your own BIN/ICA without reference to its transferability is worthless.

Should you truly wish to control a BIN/ICA, at the end of a contract you should:

1. Require the acquirer to place your merchants in a unique BIN/ICA.
2. Require the acquirer to transfer the BIN/ICA to a fellow acquirer upon the termination of your agreement.
3. State that the termination notice should be given six months in advance. Even with the above items, unless your merchant base, merchant agreements, business practices and, most important, third-party service providers are all transferable to another acquirer, your BIN/ICA portability issue is moot.

For example, if you use a little known processor or a proprietary Internet payment gateway that only a small number of acquirers support, the chances of finding a willing acquirer to which to transfer your BIN/ICA is slim. The same issue exists if your business practices are unique or customized for a specific acquirer.

What value is there in paying for the right to transfer a BIN/ICA if ultimately it is impractical to effect that transfer? Further, I know of many ISOs that have their own BIN/ICA but without the ability to transfer it. While these ISOs can boast they have "their own" BIN/ICA, it is no more transferable than the Brooklyn Bridge.

Ultimately, the reason folks want their own BIN/ICA and its control is so that they can make their asset more liquid and hence of greater value. Unfortunately, some do not fully contemplate the entire process and end up unnecessarily paying a premium.

Instead of paying for BIN/ICA ownership, sales professionals selling less than 300 merchants per month could and should work to ensure that their residuals are paid in perpetuity and that they are transferable. Doing so is many times easier and ultimately provides for the same liquidity.

Ken Musante is President of Humboldt Merchant Services. E-mail him at kmusante@hbms.com .