ntegrity Bankcard has fielded many questions recently from our Independent Sales Organization and member clients concerned with registration requirements for Visa's Agent Registration Program. Visa has fined numerous members lately for failure to follow Agent Registration Program regulations.

Of note were cases in which agent Web sites referred to ISOs that were not registered with the member. We have also noticed numerous agent Web sites that are not in compliance with other aspects of the program's regulations.

Visa created its Agent Registration Program through which members are required to register all ISOs, Third-Party Servicers (TPSs) and Independent Contractors (ICs) contracted to perform bankcard related services. Visa U.S.A. actively enforces the Agent Registration Program requirements.

The purpose of the Agent Registration Program is to:

• Increase member awareness of the risks associated with third parties
• Ensure that members control and track the activity of their registered third parties
• Enable Visa to monitor industry trends and/or individual third parties Relevant Definitions

• merchant solicitation, sales or service
• cardholder solicitation and service
• response processing for Visa program solicitations
• transaction processing and data capture

Independent Sales Organization (ISO) - A non-member organization or individual whose bankcard-related business relationship with a member is either merchant solicitation, sales or service and/or cardholder solicitation.

Independent Contractor (IC) - An individual 1099 employee of either a member or an ISO whose bankcard-related business relationship is with a member or an ISO and whose activities involve merchant solicitation, sales or services, and/or cardholder solicitation services using its own name.

(Note: If independent contractors of a registered ISO identify themselves as part of the ISO in the marketplace via business cards, letterhead, Web sites etc., the contractors do not have to register with Visa. The compensation method is not a factor.)

To register a third-party ISO or IC, members must complete the "Independent Sales Organization/Third-Party Servicer/Independent Contractor Registration" form (Visa U.S.A. Operating Regulations, Exhibit VV) and send it to Visa's Membership and Records Administration for processing. Upon completion of the registration process, all registration information will be housed in the Agent Reference File.

Pre-Registration Compliance Requirements

There are three steps members must take before submitting the Exhibit VV to Visa.

1. Query the Agent Reference File

   Contact Visa U.S.A. Membership and Records Administration via telephone or fax. If the organization is registered with current relationships, the number of relationships and the dates initiated will be provided. (The names of members with current relationships will not be disclosed.)

   If a third party's relationship with another member has been discontinued for any reason, the inquiring member will be referred to the member with the former relationship for additional information. No other information will be given, and no derogatory information will be kept on the Agent Reference File.

2. Conduct a background investigation

   The member must perform a background check of the third party, including verification of financial responsibility of the principals to ensure that there is no significant derogatory information.

   Although it is not required by the Visa U.S.A. Operating Regulations, the investigation may include information regarding all individuals holding stock in the third party, criminal background checks on all principals and information on prior business relationships.

3. Conduct site and inventory inspections

   The member must perform a site inspection of the third party's business location, including verification of inventory, if applicable, and review the solicitation or sales materials. Each member must ensure that any use of the Visa Card Program Marks by its third parties are in compliance with Visa U.S.A. Operating Regulations. In any calendar year, a member will not be required to pay both the initial and the annual fee. Members failing to comply with the requirements of Visa's Agent Registration Program will be fined for infractions including:

   • Noncompliance with the regulations requiring all members to perform the necessary steps prior to contracting with an ISO, IC or Third-Party Servicer (query the Agent Reference File; conduct a background investigation of the third party; perform a site and inventory inspection).

   • Noncompliance with Visa rules which requires all members to register and pay fees for all ISOs, ICs, or Third-Party Servicers providing services on their behalf. In addition, members must notify Visa of any change in the relationship within three business days.

     If a member is found to be in violation of the Agent Registration Program and a fine has been assessed, the member must immediately correct the violation by either registering the ISO, IC or third-party servicer as required or notifying Visa U.S.A. of the corrective measures taken.

   Agent Registration Program fines are as follows:

   • $10,000 for the first infraction
   • $20,000 for the second infraction in a five-year period
   • $50,000 for the third infraction in a five-year period

   Member Identification

   Any correspondence, supplies or solicitation materials (including those to be used for broadcast, audio and Internet solicitation) must prominently identify the member's name and location. In addition, all Visa members must ensure that all solicitation material distributed by registered third parties comply with the following guidelines:

   • The member's name and city must be prominently identified adjacent to the Visa marks
   • The third party must be identified as a representative of the Visa member
   • All solicitation materials must clearly disclose that any merchant agreement is between the Visa member and the individual merchant
   This is particularly true for ICs who identify themselves in the marketplace as part of a registered ISO via business cards, letterhead, Web sites, etc. The ISO needs to control and monitor the use of all materials used by these contractors and agents to ensure that only proper materials are being used.

   ISOs must also control and monitor the sub-ISOs and ICs that submit business to them to ensure that proper materials are used and appropriately registered with Visa.

   Initial and Annual Registration Fees

   Initial Registration Fees
   Type of Organization	Amount	Assessment
   Independent Sales Organization	$5,000	per relationship
   Independent Contractor	$1,000	per relationship
   Annual Registration Fees
   Independent Sales Organization	$2,500	per relationship
   Independent Contractor	$500	per relationship

   David H. Press is Principal and President of Integrity Bankcard Consultants, Inc. Phone him at 630-637-4010, e-mail dhp@integritybankcard.net or visit www.integritybankcard.net