ooner or later every agent will want to sign a merchant who is already procuring services from the agent's processor. Some companies welcome this churning of their portfolio, while others consider it a breach of the agent agreement.

Here are some tips to help you know your rights and obligations relative to soliciting your processor's merchants.

Ask your merchant

Before you get too involved in the sales process, make sure you ask merchants who provides their bankcard processing. Merchants are often confused about who is actually handling their processing, but you should gather as much information as the merchant is able (and willing) to share.

Also, conduct research using the Internet, local business directories and the telephone to identify the merchant's payments industry relationships. Knowing a merchant's status will help you to adapt your sales pitch accordingly.

Ask your processor

When asked to do so, some processors will inform their agents if a given merchant is already doing business with them. It behooves processors to know whether their agents are soliciting their merchant base.

Read your nonsolicit clause

Suppose you are promoting the services of Acme Processor. A well-drafted nonsolicit clause in your agent agreement will clarify whether you are allowed to re-sign a merchant who is already party to a merchant agreement with Acme Processor and its bank.

However, many clauses are not well-drafted. The main purpose of a nonsolicit clause is to prevent agents from soliciting merchants to move them to another bank.

But the clause (together with the rest of the agreement) may actually permit an agent to re-sign a merchant who is already processing with a given processor or bank.

Distinguish between what your nonsolicit clause says about specific merchants you have referred to the processor, as well as the much larger group of all merchants procuring services from the processor. You may be allowed to re-sign merchants from the larger group, but perhaps not those you brought to the processor yourself.

Be careful not to breach a nonsolicit clause in your agent agreement. Processors are especially sensitive when agents do this - and rightly so.

Price the playing field

If your agent agreement permits you to re-sign merchants who are already with your processor, ask whether your processor is set up to process applications from its own merchants.

During that conversation, try to get a feel for the price range other agents work within when they compete with you for your own merchants. It's helpful to know what other people have in their sales toolbox.

Ask your processor for alerts

Some processors are offering a new service: They inform agents when another agent has tried to re-sign one of their merchants. Suppose Agent Albert signed Joe's Pizza with Acme Processor a couple years ago.

Then, along comes Agent Ben, who is also an agent for Acme. Agent Ben approaches Joe's Pizza and wants to re-sign the merchant with Acme.

As part of this service, Acme will ask Agent Albert whether he is willing to let Agent Ben re-sign Joe's Pizza before Acme takes any action. Naturally, very few agents in Albert's shoes would permit the merchant to be re-signed.

Processors should all employ this common-sense service. It can reduce unnecessary attrition in agent portfolios and build loyalty among agents working for the processors providing it. Ask your processors and ISOs to offer it to you.

Track your merchants

If your agent agreement allows you to re-sign merchants who are already with your processor, chances are other agents working with the same company have a comparable deal. As such, you should be aware of agents who may try to take merchants from you using the same set of tools you use.

The best way to hold on to your merchants is to use the following attrition-reduction techniques:

• Keep in touch with your merchants.
• Provide excellent customer service.
• Give merchants more reasons to be in touch with you than just troubleshooting problems with their terminals.
• Find ways to add value to merchant locations that go beyond merchant-account pricing.

As an agent, you will probably have your own set of customized techniques for merchant retention that work in your specific market or geographic area.Regardless of your techniques, the more you know about your merchants the better.

Seek custom protection

Some processors may permit specific agents to be shielded from a general policy allowing their agents to re-sign one another's merchants. When negotiating an agent or ISO deal, ask whether the processor will provide you protection from its other agents who may seek to re-sign your merchants.

It's one thing to lose a merchant. It's another thing to lose a merchant to a colleague who represents the same processor as you.

Do a reality check

Once you believe you know your rights regarding solicitation of merchants already with your processor, meet with an agent with whom you are friendly who also works for your processor. Discuss that individual's policy on the topic.

Specific terms of the other agent's agreement and yours are very likely subject to confidentiality clauses.

But you can ask the other agent if he or she can board merchants who are already boarded with your processor. Knowing another agent's position may be helpful in understanding your own.

Many agents do not know whether they can re-sign merchants with their current processor. If you're in this camp, identifying your parameters in this regard can help you plan better business strategies and more effective methods of reducing attrition.

In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, seek the services of a competent professional. For further information on this article, e-mail Adam Atlas, Attorney at Law, at atlas@adamatlas.com or call him at 514-842-0886.