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Independent sales organizations should ensure that processors do not lower or stop their residual payments from merchant transactions by including specific residual provisions in their processor contracts, according to Jill Miller, attorney and counselor with Jaffe Raitt Heuer & Weiss, a Southfield, Mich.-based law firm. Residuals are monthly payments agents receive, typically from credit and debit card processing, but they also can come from such products as gift cards and ATM programs. To their contracts, "processors often add that residuals terminate if residuals drop below $500" or if an ISO's agent commits fraud, says Miller. ISOs need to "spell out" in their processor contracts that residuals should never stop at any time, she says. "Despite the most optimistic projections, relationships end. ISOs need to negotiate on the front end to make ending easier," says Miller.
