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Insights and Expertise

• Digital wallet service: Phones have digital wallet ap- agent of a payfac powered by a string of APIs, such that
plications that store digital card credentials. When the line of sight between merchant and acquirer is fuzzy.
you save the expense card to the digital wallet app,
you are using that app to store the card. This is problematic and potentially illegal, but very easy
• Merchant: This is the merchant (for example, a hotel) to implement with contemporary technology. A merchant
that accepts the card as a payment method. may be boarded with an acceptable underwriting profile,
but they may allow their MID to be used by a third party
Payments professionals can benefit from taking a moment to process transactions that would be prohibited under the
to consider who plays which role in the above. For exam- terms of the applicable merchant processing agreement.
ple, if you are an ISO involved in traditional acquiring and
you want to start offering your merchant payment cards, The payfac and acquirer might never know because they
it is beneficial to consider whether you are going to resell simply receive API calls with cardholder transactions that
cards for an issuer, a program manager or an agent of a might be somewhat disconnected from the actual shop-
program manager. Remember, not everyone has the legal ping cart and transactions.
right to sell what they are selling.
The increasing dissociation of issuers from cardholders
The upshot on the issuing side is that cards presented to and acquirers from merchants is overflowing with AML,
merchants are sometimes only tenuously connected to the legal, fraud and other risks. Payment professionals can
person making the purchase. When data breaches, fraud, mitigate these risks by learning exactly who is who.
returns or chargebacks occur, it might be difficult to un-
wind a transaction that has air gaps between the tradi- In publishing The Green Sheet, neither the author nor the publisher are
tional rails and what is happening in the real world. engaged in rendering legal, accounting, or other professional services.

MIDs on the move If legal advice or other expert assistance is required, the services of a
competent professional should be sought. For further information on
Readers of The Green Sheet are well aware that a MID used this article, please contact Adam Atlas, Attorney at Law email: atlas@
to acquire a transaction may have been supplied by an adamatlas.com, Tel. 514-842-0886.

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