Page 31 - GS220501
P. 31
Education
Both buyer and seller must plan for residuals under the a known set of merchants on closing. Those buyers
ISO agreement that were historically shared with agents. sometimes like to cherry-pick merchants two or three
Will those agents be bought out? If not, who will pay years later, which is complicated considering many
the agents going-forward? Buyer and seller must plan merchants will be gone by then.
for these and related issues before inking their deal. The
buyer also needs to plan for registration of the buyer as In addition, buyers sometimes want sellers to back-fill the
the sponsored entity under the ISO agreement, which may portfolio years later with newer merchants. And if that's
take time and cost money. not complicated enough, the parties must sort out who
will pay agents that may be receiving part of the residuals
Sale of only a residual stream purchased. Processor consent is also an issue.
Some buyers only want the upside. When an ISO sells only
a residual stream, whether they like it or not, both parties Deals do not always fall neatly into the categories I've
are entering into a long-term marriage with complications. described, but hopefully, the general models discussed
The buyer pays a certain sum for a future stream of will serve as inspiration for you to decide which type of
residuals under a specific ISO agreement. deal is best for you.
If the seller, however, defaults under that ISO agreement, In publishing The Green Sheet, neither the author nor the publisher is
that residual stream will be in jeopardy—so the parties engaged in rendering legal, accounting, or other professional services.
need to address that risk. Similarly, the buyer might do If legal advice or other expert assistance is required, the services of a
something that offends the processor paying residuals, competent professional should be sought. For further information on
which may harm the residual stream purchased. this article, please contact Adam Atlas, Attorney at Law by email at
atlas@adamatlas.com or by phone at 514-842-0886.
The most vexing issue with selling a residual stream is
figuring out the portfolio of merchants to which it relates.
Some buyers are not willing to lock their purchase onto
