Page 34 - GS250401
P. 34
ChapterTitle
Insights and Expertise
the UK won’t become an acquirer. Instead, it is likely to
contract with an acquirer under an ISO agreement that
is not altogether different from a U.S. ISO agreement.
Note that portability (the right to move merchants to
another acquirer on termination or perhaps before) is
Legal ease: a new concept for European acquirers, so be prepared
to fight for it.
In Europe and Canada there are laws that give more
rights to merchants to terminate their merchant
agreements and take their business elsewhere. The
effect is merchants are somewhat more empowered
ISO international vis-à-vis ISOs.
2. Incorporation
expansion – Flying It usually costs only about $3,000 to incorporate a
new company in Canada, Ireland (a good country
the coop and from which to access the EU), the UK or continental
Europe. Assuming you are not taking possession of
winning legally funds or becoming an actual acquirer, the capital
requirements will be nominal. Budget for annual
corporate maintenance fees and annual tax filing fees,
By Adam Atlas all of which could be about $3,000 per year.
Attorney at Law 3. Licensing
nce you have built a successful U.S. domestic Assuming you are not going to take possession of funds
ISO business, you might get the itch to enter or become an actual acquirer, the most likely outcome
foreign markets. The process can seem over- is that a new ISO in Europe, the UK or Canada will
O whelming from a legal perspective, but it’s not need any government licensing or registration (like
not as hard as it seems. The purpose of this column is to money transmitters need).
identify a few legal threads that are relevant to an interna-
tional expansion. In Europe a handful of payments activities could render
a business a payment institution, an electronic money
1. Acquiring rules the world institution or other form of government-regulated
entity. It’s best to avoid that status, as it comes with
It turns out the concepts such as the card issuer, significant cost and time, meaning $150,000 and two
acquirer, processor, payment facilitator and even years of time.
ISO are written into network rules and replicated
throughout the world. There are of course distinctions Similarly, in Canada taking possession of customer
and exceptions, but at a high level, the key players are funds and other regulated payments activities requires
roughly the same. registrations and licensing costing a similar amount
and taking about six months.
Looking specifically at acquiring, it’s noteworthy that
in many non-U.S. jurisdictions, like Europe and (as 4. Banking
of recently) Canada, the networks allow non-bank
acquirers to process card transactions for merchants. Believe it or not, the European banking market is
In the United States a typical ISO agreement has three more competitive than the U.S. market and offers new
parties, the acquiring bank (for example, Wells Fargo), businesses a greater selection of banks ready to serve a
the acquiring processor (for example, Fiserv) and the new business. It shouldn’t be difficult to obtain regular
ISO. commercial banking in Europe.
In Europe, the bank isn’t necessary if the processor In the United States, some banks will not bank ISOs
has itself become an actual acquirer. That process because the banks sometimes confuse them with
involves wrangling with the networks as well as licensed money services businesses. European banks
local government regulators that mandate licensing, are less skittish.
registration and many other requirements for
acquirers. A typical U.S. ISO expanding to Europe or
34
