Payment Processing Agreements and Advisory

Rome LLP drafts, reviews, and negotiates agreements governing merchant acquiring and fintech programs for banks, payment companies, fintech businesses, and merchants. The firm handles new program launches, amendments, portfolio transactions, and changes in sponsors or processors.

Responsibility should correspond to control. A party bearing merchant or program losses should receive the information and account rights needed to manage them. A party drawing on reserves or exercising setoff should identify the underlying exposure and account for the amount taken.

Sponsor-Bank and Sponsored-Entity Agreements

Bank sponsorship agreements must preserve the acquiring bank’s required oversight while defining the sponsored entity’s operational role and economic rights. The bank retains final authority over merchant approval and program risk, while the sponsored entity performs the services assigned under the program.

The agreement should match each party’s responsibilities to its access to data and account controls. It should also define the financial consequences of merchant losses and the circumstances in which the bank may restrict activity or require remediation.

The agreement should define the sponsored entity’s rights in the merchant portfolio after termination, including whether it may continue servicing or transfer merchants to a successor sponsor. The exit provisions should specify the approvals and cooperation needed to move the accounts and state how reserves and pending liabilities will be handled.

Processor and Payment-Provider Agreements

ISOs and payment companies may rely on a processor or other payment provider for settlement, reporting, merchant data, and migration support. Without express rights to that information and assistance, the ISO may be unable to verify charges or move the portfolio.

The agreement should cover pricing, minimum commitments, and responsibility for operational errors. It should also require timely settlement, merchant-level reporting, and the data and assistance needed to transfer accounts when the relationship ends.

Sales-Agent and Referral Agreements

Sales-agent and sub-ISO agreements should state who owns the merchant relationship and define the agent’s rights in the residual stream. They should also specify how residuals are calculated and reported and when payments may be suspended or terminated.

The agreement should also address any sale, assignment, or buyout of residual rights. It may give the ISO a consent right or right of first refusal and require the purchaser to assume the agent’s continuing obligations. A sale of the merchant portfolio or the ISO may trigger separate rights, such as tag-along or change-of-control provisions.

Confidentiality and merchant-protection provisions should target misuse of confidential information, interference with existing merchant relationships, and other wrongful conduct rather than impose a blanket prohibition on solicitation.

Merchant Agreements and Account Terms

Merchant agreements often combine an application and fee schedule with separate terms, reserve provisions, and program disclosures. Those documents should use consistent definitions and clearly state the parties’ rights concerning fees, reserves, setoff, and termination.

The agreement may incorporate card-brand rules by reference, creating contractual duties beyond its express terms. The merchant-facing documents should therefore align with the provider’s operating model and the rules governing the program.

Because these agreements are generally standardized, ambiguity and incomplete delivery create avoidable enforcement risk. Providers should preserve evidence that the merchant received the complete agreement before acceptance. Separate terms should be clearly incorporated and made available during onboarding, not delivered only after approval or referenced without a functioning means of access.

Customer-facing billing practices raise separate issues when the merchant terms do not match what the customer sees, accepts, and experiences after purchase.

Fintech and Bank Program Agreements

Fintech program agreements must track how funds move through the program and how authority is allocated. They should identify where customer funds are held, who maintains the customer ledger, and which party controls transactions and account restrictions.

A standard bank-services form may leave those functions unclear when the fintech handles customer-facing operations but depends on the bank for settlement and regulatory approvals. The agreement should require each party to provide the information and cooperation the other needs and to perform the functions for which it is responsible.

Exit provisions should preserve access to customer funds and records during a move to a successor bank. They should also state how pending transactions and unresolved claims will be handled.

When those issues are left unresolved, disputes often follow over platform reserves, merchant balances, reporting, and account control.

Portfolio Transfers and Deconversion

A merchant portfolio transfer requires both legal assignment and operational conversion. The documents should identify the merchant relationships being transferred, allocate liabilities before and after closing, and require the data and approvals needed to complete the migration.

A BIN or ICA transfer may also require card-brand approval, processor coordination, testing, and a defined cutoff. The deconversion agreement should address merchant notices and state how reserves, pending chargebacks, unresolved balances, and surviving obligations will be handled.

Agreement Drafting and Negotiation

Rome LLP drafts payment agreements and negotiates counterparty forms. When several contracts govern the same program, we review them together to identify conflicting obligations and rights that depend on another party’s cooperation.