rom emerging technology to creative recruitment strategies by ISOs searching for new merchants and agents, the payments industry is constantly changing. However, one issue that frequently resurfaces is agent registration.

The industry has debated few issues as often or as intensely as those concerning compliance with the card Associations' agent registration regulations.

Many merchant level salespeople (MLS) think that talk of fines levied by the Associations are simply rumors. Others acknowledge that the Associations have actually assessed fines to noncompliant sales agents.

Regardless of opinion, the regulations are in writing and available for MLSs to view. While MLSs may try to interpret the regulations, they should keep in mind that the regulations' ultimate meaning is based solely on the intent of the authoring institution.

What Do The Regulations Say?

Both Visa U.S.A. and MasterCard International have specific regulations pertaining to who must register with them. According to the "Visa U.S.A. Guidelines for Non-Member Agents" manual, Visa defines an ISO as:

An organization or individual that is not a member and whose bankcard-related business relationship with a member involves any of the following:

• Merchant solicitation, sales or service
• Merchant transaction-processing solicitation
• Cardholder solicitation or card application processing services
• Deployment of and/or services of qualified ATMs and POS systems

Anyone operating as an MLS meets these criteria in one or more areas. Since MLSs fall under the definition of an ISO according to Visa regulations, they become subject to any and all regulations pertaining to an ISO.

One of these regulations concerns registration of the ISO with the Association. Chapter Two of the Visa manual covers agent registration in-depth. The chapter begins with a list of who must be registered.

The manual also states that a Visa member must register an agent that conducts any of the following acquirer services/activities:

• Solicits merchants
• Provides a gateway for transactions from merchant locations to processors
• Transmits, captures or stores Visa cardholder information
• Accesses member bank identification numbers, or BINs
• Provides merchant 3D-Secure/Verified by Visa services
• Provides back-office support (e.g., customer service and exception processing)
• Supports loyalty programs

• Deploys and/or services qualified ATMs and POS systems
• Loads or injects encryption keys into terminals or POS PIN pads
• Loads cryptographic keys into ATMs and cash dispensers
• Provides merchant help-desk support, which includes re-programming of terminal software
• Processes transaction authorizations

What Does All This Mean?

Now that we know what the regulations say, what do they really mean? Based on the regulations as written by Visa, MLSs have only two options: registration or marketing under the name of an ISO that is already registered.

Marketing, for purposes of compliance, includes: any Web site operated by an MLS; business cards; marketing brochures or pamphlets; and how MLSs answer the phone.

When marketing under a name not registered as an ISO, the MLS is not the only one susceptible to fines. Visa will hold responsible for payment of the fine any legitimate ISO to which the MLS submits business if the MLS is unable to pay it. The Associations have already assessed fines for MLSs deemed noncompliant, and they can assess them at any time and without warning.

MLSs who choose to register should contact their ISO or member bank for more information. Although registering as an ISO comes with a cost, the fees for operating within the regulations are much less expensive than the fines charged for any infractions.

Bill Weeks is the Risk and Compliance Manager for Electronic Exchange Systems (EXS), a national provider of merchant processing solutions. Founded in 1991, EXS offers ISO partner programs, innovative pricing, a complete product line, monthly phone/Web-based training, integration services and, most of all, credibility. EXS is a registered ISO/MSP for HSBC Bank USA, National Association. For more information, visit EXS' Web site at www.exsprocessing.com or e-mail Bill at billw@exsprocessing.com .