ntegrity Bankcard has fielded many questions from our ISO and member clients concerned with registration requirements for Visa's Agent Registration Program. Visa has fined numerous members 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

Agent Reference File - A historical file maintained by Visa U.S.A. that contains company names, addresses, principal information and quarterly activity information for ISOs, TPSs and ICs. Third parties listed on the Agent Reference File perform any of the following services on behalf of a Visa member:

• Merchant solicitation, sales or service
• Cardholder solicitation and service
• Response processing for Visa program solicitations
• Transaction processing and data capture

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.

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, Visa will house all registration information in the Agent Reference File.

Pre-registration Compliance Requirements

Members must take the following three steps 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, Visa will provide the number of relationships and the dates initiated. (It will not disclose names of members with current relationships.) 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 in 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 Visa U.S.A. Operating Regulations do not require it, 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 a verification of inventory, if applicable, and a review of the solicitation or sales materials. Each member must ensure that any use of the Visa Card Program Marks by its third parties is in compliance with Visa U.S.A. Operating Regulations.

In any calendar year, Visa will not require a member 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 that 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 they only use proper materials.

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

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