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Insights and Expertise

look to the ISO that resold the service to protect those
merchant relationships.

Legal ease: ISO-POS platform sales agreements will often contain
non-solicitation provisions preventing the ISO from
porting the merchant over to another POS platform. When
times are good and the platform is operating properly, it
is reasonable for the ISO to accept certain limitations on
POS platforms: its right to re-solicit merchants for another POS platform.

The ISO's dangerous However, both parties will benefit from using the ISO-
POS platform contract to plan for scenarios in which
the ISO has the right—and the POS platform agrees—to
paradise facilitate migration of a merchant or an entire portfolio to
an alternative supplier.

By Adam Atlas The exact list of these exceptions is to be negotiated on
Attorney at Law a case by case basis, but like triggers would include: (i)
an unplanned outage for which there is no likelihood of
erchants rightfully yearn for a platform repair within a reasonable period of time; (ii) material and
that handles everything, all the time, every- uncured default by the POS platform; and (iii) inability of
where. ISOs use POS platforms fulfilling the POS platform to continue maintaining the planform.
M this requirement to sell integrated merchant
processing accounts (the MID). This reality is a double- In a recent case, a super-ISO that owns a POS platform
edged sword for ISOs. elected to stop supporting the platform. Some ISOs under
that super-ISO had entire portfolios reliant on the platform.
On the one hand, a whiz-bang all-in-one platform helps The super-ISO was insensitive and thought the merchants
make the sale, creates stickiness and opens revenue
opportunities for the ISO that faces compressed margins A steady legal hand in a
on the MID. On the other hand, if a large portion of an changing payments world
ISO's merchant portfolio is using a single POS platform,
the ISO can face a crisis if the platform crashes or if it's For more than 20 years, payments attorney Adam
purchased by another ISO or a processor. Atlas has helped readers of The Green Sheet make
sense of the legal and regulatory issues shaping
The purpose of this article is to identify five legal issues the acquiring industry. Through his long-run-
that are relevant, from the ISO's perspective, when signing- ning column, Legal ease, Atlas has offered practi-
up to resell a POS platform on which merchants will rely. cal guidance on everything from ISO agreements
and processor relationships to emerging technol-
1. Have a Plan B ogies such as cryptocurrency, open banking and

No matter how excellent a given POS platform is, an ISO artificial intelligence.
should find a back-up provider of comparable quality. The
ISO should board at least some merchants with the backup Atlas heads Adam Atlas Attorneys at Law, a bou-
provider and develop a realistic plan for the IT plan of tique firm founded in 2003 that focuses on legal
how a merchant could migrate from the main provider to and regulatory matters affecting fintech, pay-
the backup. ments and money services businesses. Based in
Montreal and licensed to practice law in both
The ISO should have a plan in place for the (unlikely) New York and Quebec, Atlas advises companies
catastrophic scenario where the main provider has around the world on the complex regulatory
irredeemably crashed and merchants are unable to process frameworks governing electronic payments, card
until they are boarded with the backup. The ISO might acquiring, digital currencies and emerging finan-
never have to run this playbook, but in those cases where cial technologies.
it is run, it may mean the difference between a temporary
crisis and ruin. Before launching his firm, Atlas practiced cor-
porate law at an international business law firm,
2. Deconversion clauses with main provider gaining experience that would later inform his
specialized fintech practice. He now works with
POS platforms are naturally protective of their merchant a wide range of payments businesses, from tra-
relationships. Having invested in development of the ditional ISOs and payment processors to crypto
software behind the platform, a POS platform will want ventures and fintech startups navigating licens-
merchants to accept contracts with a term and will often

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