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Education

ISV/VARs on the other hand sometimes position them- Accommodating the other party
selves as brokers acting for merchant interests in sourcing
the best suppliers of payments or other services and hav- The opportunity for an ISO to sign hundreds or thousands
ing a willingness to swap one supplier out for another if of merchants all at once is coupled with an almost equally
the outgoing supplier is found wanting. troubling risk of the ISV/VAR (rightly or wrongly) having
the de facto ability to take that same portfolio away with
These two approaches are incompatible and produce the the flick of a switch.
most difficult parts of the ISO and ISV/VAR agreement
negotiations. The ISV/VAR wants to be able to drop the To arrive at the right, mutually beneficial and trust-build-
ISO at any time. Meanwhile, the ISO has committed to its ing agreement, ISOs and ISV/VARs need to understand
processor to never move merchants except under certain each other's business and, albeit sometimes begrudgingly,
limited exceptional circumstances. accommodate the needs of the other party.

ISV/VARs usually operate without any regulatory frame- ISV/VARs need to never place an ISO in violation of the
work (except HIPAA in the medical space), so it is jarring payment network rules or contractual obligations to ac-
for them to be told that a merchant agreement has a fixed quirers. On the flip-side, ISOs often adapt to become more
term and that the acquirer may take action if an ISO so- customer-focused and less rigid much like the way their
licits a merchant away from the acquirer other than for new ISV/VAR sales channels have been from their own
certain limited reasons. genesis.

Therefore, the ISV/VAR usually goes through a long pro- In publishing The Green Sheet, neither the author nor the publisher is
cess of learning about the requirements in customary pay- engaged in rendering legal, accounting, or other professional services.
ment processing referral agreements. This does not always If legal advice or other expert assistance is required, the services of a
end well. Some result in an awkward agreement under competent professional should be sought. For further information on
which the ISO takes more risk than it should over non- this article, please contact Adam Atlas, attorney at law, by email at
solicitation breaches, and the ISV/VAR walks back some of atlas@adamatlas.com, or by phone at 514-842-0886.
the freedom to which it is accustomed in its core offerings.

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David Daily
Zach Daily CEO & Founder Alex Daily
Business Development Business Development
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