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Insights and Expertise

Without some legal discussion of the competing rights in These are both reasonable positions, but they are
that data, ISOs and VARs are setting themselves up for fundamentally incompatible. The ISO needs to entertain a
disappointment when either one tries to prevent the other degree of flexibility in its approach to non-solicitation by
from using merchant or cardholder data. This competition the ISO, and the VAR needs to learn about the real-world
in rights for the same information is sometimes solved by commitments of ISOs to their processors to not move
the parties agreeing in writing that they will each own a merchants away from them willy-nilly.
set of the data outright for their respective purposes.
There is no one-size-fits-all solution. What is certain is that
4. Sensitive data to overlook these two opposing realities is to pre-program

Unless they are Health Insurance Portability and the relationship for challenges down the road. When the
Accountability Act (HIPAA)-compliant, ISOs want to keep VAR finds a better deal with another ISO, the outgoing
as far away from medical data as possible. Some VARs ISO will want to rely on the non-solicitation obligations
deal in medical data. ISOs should be wary to not let highly in the VAR agreement to protect its portfolio. The ISO
confidential medical data infect (ha ha) their systems and VAR both have an interest in thinking ahead to that
by imposing on the ISO HIPAA compliance obligations possible scenario.
it is not ready to assume. A patient's X-ray payment, for
example, should not easily tumble out of an ISO server. As with all new sales channels, there is always a winning
formula to be found. VARs, however, present additional
5. Non-solicitation challenges while unlocking enormous potential both for
ISOs and the VARs themselves.
The VAR says to the ISO: These are my customers and I'll
solicit them for whatever I want, whenever I want. In publishing The Green Sheet,neither the author nor the publisher are
engaged in rendering legal, accounting, or other professional services.
The ISO says to the VAR: I am legally prohibited from re- If legal advice or other expert assistance is required, the services of a
soliciting any merchant or allowing the VAR to re-solicit competent professional should be sought. For further information on
any merchant boarded with my acquirer. this article, please contact Adam Atlas, Attorney at Law email: , Tel. 514-
842-0886.