HUNTINGTON BEACH, Calif. -- Salespeople usually can’t do anything about it when a processor or independent sales organization cancels the residuals earned from signing up merchants for transaction processing.
Their attempts to hang onto their residuals are usually stymied by the unfavorable contracts they’ve signed, Paul A. Rianda, an Irvine, Calif.-based attorney, told attendees here Wednesday during the Field Guide for ISOs sessions at the Western States Acquirers Association 2012 Conference.
Salespeople usually lose their residuals because they have broken a contractual vow not to “move” merchants, Rianda said. In other words, a salesperson leaves an ISO or processor and takes merchants along, signing them up for services from a new employer.
Moving just one merchant can void all of a salesperson’s residuals, Rianda cautioned.
In contracts, provide for a “monetary cure,” Rianda said. Such a provision could enable a salesperson to pay cash to compensate for damages that arise instead of forfeiting residuals, he maintained.
Salespeople who truly want to move a merchant should persuade a former employer to sign an amendment to the original contract to allow bringing along that one retailer, he advised.
Other precautionary measures for ISOs and agents include picking their sales reps carefully because employee’s actions can damage the employer, Rianda said. Insist on background checks that include criminal history, he advised.
Review marketing materials to avoid problems, Rianda told attendees. A sponsoring bank’s name on a T-shirt can have unpleasant fallout, he noted.
And, finally, Rianda said, “Always get it in writing.”
