Page 31 - GS240301

Education

Online sellers are now obligated to collect and remit
state sales tax. When a Florida fruit basket is sent to
New York, the Florida seller has to collect and remit
New York state sales tax. Calculating the amount of
tax on such sales is complicated, as taxes may differ
depending on what is purchased (for example, diapers
versus beer) as well as where the products are sold
(New York versus a native tribal land) and when it is
purchased (tax-free Tuesday).

A new set of service providers has come along to help
merchants sort all this out with APIs. Curiously, sales
tax compliance providers need to peer into the con-
sumer's shopping basket to calculate the taxes payable.
Ironically, sales tax compliance platforms may be pick-
ing up more data on consumer habits than payment
processors that handle funds and carry risk on the
payment transactions behind the purchases.

Concluding on title in data, the answer lies in what
consents the consumer and merchant have given to the
processor, acquirer and ISO to collect, store, process,
use and disclose their data. Without those consents in
place a party's rights in data are tenuous.
What can an ISO do with data?
ISO rights in data are a function of the consents of the
data subjects given. For example, if a merchant has
opted in to receive commercial solicitation by the ISO
for additional services, then the ISO can use merchant
contact information for that kind of solicitation.

If the merchant has given the ISO a more comprehen-
sive consent—covering processing and banking infor-
mation—the ISO might have the right to use that infor-
mation to tailor offers, such as cash management.
With the benefit of AI, ISOs may be able to process
merchant data in which they have rights to generate
new value for merchants in areas such as risk manage-
ment, marketing and pricing.

Today's reality is that there is more value in data than
there ever has been before. The challenge for ISOs is to
become the rightful holder of rights in the data (that
is, do better than OpenAI) and then apply powerful
tools to add value to the merchant experience, which is
a cornerstone of any merchant services business. The
flip side of collecting data and generating value with
the data is, of course, security.

In publishing The Green Sheet, neither the author nor the publisher
are engaged in rendering legal, accounting, or other professional
services. If legal advice or other expert assistance is required, the
services of a competent professional should be sought. For further
information on this article, please contact Adam Atlas, Attorney at
Law email: atlas@adamatlas.com, Tel. 514-842-0886.

31