Payments is one of the most rapidly evolving areas of financial services. We represent the entire value chain of the payments industry, including financial institutions, payment networks, payment processors, money transmitters, prepaid program managers, merchants, corporate payors and payees, and others. We have counseled the payments industry for many years, and have advised many of the companies responsible for the recent explosion of innovation in this area.
Emerging internet, mobile and social payment regimes have challenged existing paradigms from both a legal and commercial perspective. In this dynamic environment, we provide a unique blend of strategic regulatory advice and transactional counseling that combines our deep and broad background in the payments industry with our insight into cutting-edge legal developments in this area.
Domestic Regulatory Counseling
Our lawyers regularly advise clients regarding the wide range of federal and state laws and regulations that directly and indirectly affect their payments business, including those that relate to privacy, data security, money laundering, licensing and consumer protection. We are knowledgeable on laws governing credit cards, debit cards, prepaid cards, virtual currency, electronic fund transfers and other forms of payment. Our long-standing preeminence in the payments area and our creative approach to new technological developments has led to our engagement not just by the leaders in traditional payments, but also by innovators in e-commerce and internet payments, prepaid products and mobile and social networking payment services. We work proactively with clients to stay ahead of regulatory trends and to structure products and services to provide optimum compliance outcomes. This can involve a wide range of strategies, including day-to-day compliance counseling; assisting in product planning to avoid potential regulatory pitfalls; crafting policies, procedures, agreements and disclosures to satisfy regulatory obligations; engaging in formal or informal dialogue with appropriate regulatory bodies; analyzing and commenting on regulatory initiatives that have the potential to affect a client’s business; and, assisting in legislative initiatives to influence the direction of regulation in this area.
We have an extensive international payments practice acting for clients with European and international operations, as well as for clients based in the U.S. or elsewhere that want to establish financial services businesses in the EU or internationally. Through our London office, we advise on a wide variety of European regulatory issues such as those relating to licensing and authorization, use of the EU financial services “passports,” regulation of e-money, anti-money laundering, the delivery of financial services using the internet, consumer credit, consumer protection, data protection and the application of the EU’s Payment Services Directive. We also have assisted clients on commercial arrangements and joint ventures associated with payments and payment networks in the EU, Asia, the Middle East and Africa. Sidley is a founding member of Commercial Payments International and a member of the Prepaid International Forum in London, where our lawyers are co-chairs of the Legal and Regulatory Working Group.
We have represented the entire range of payments industry participants in transactional matters. Our lawyers bring a unique industry-wide perspective to the task of drafting and negotiating payments agreements. Representative transactions types include:
- Joint venture and strategic relationship agreements to establish and/or distribute payment products or create new payment systems
- Payment network participation agreements
- Payment processor and other vendor agreements
- Private label, co-branded and agent bank credit card program agreements
- Prepaid card program, distribution and processing agreements
- Merchant acquiring agreements
- U.S. and international commercial (T&E and P-Card) credit card program agreements
- Internet and mobile payment agreements
- Bill presentment and payment agreements
- Gateway agreements
- Sponsorship agreements
- ATM placement and operation agreements
Joint ventures and strategic relationships:
- Represented a global payments processor both in the U.S. and around the world (including in the United Kingdom, the Netherlands, Ireland, Sweden, Poland and Italy) in connection with a number of joint ventures and strategic alliances for the provisions of payment solutions, including for credit, debit and prepaid cards acceptance, bill payment and e-commerce transactions.
- Represented a national grocery chain in the creation of a joint venture with an international bank for the creation and distribution of a variety of retail financial products and services, including credit cards, prepaid cards and insurance.
- Represented one of the top internet portals in connection with its payments joint ventures with two international banks.
- Represented a national retailer in connection with its proposed investment in a merchant-owned mobile payments system.
- Represented NACHA in connection with creation of the “QUEST” network for electronic distribution of government benefits.
- Represented a leading payment system in a strategic global prepaid card alliance with the world’s largest distributor of foreign currency prepaid cards.
- Represented eBay in connection with its $240 million acquisition of Zong, a mobile payments company. The transaction involved experience from multiple disciplines, including payments regulation, telecommunications regulation and intellectual property rights. It also involved lawyers in our London and Geneva offices in light of the target’s extensive European operations.
- Represented Bill Me Later, a technology company that provides online payment services and solutions, in its sale to eBay, Inc. for approximately $945 million in cash and assumed options.
- Represented First Data Corporation in its agreement to be taken private by Kohlberg Kravis Roberts & Co. in a transaction valued at approximately $29 billion, at the time, the second-largest leveraged buyout ever.
- Represented several buyers and sellers of credit card portfolios in connection with the transfer of billions of dollars of credit card assets.
- Provided full-service legal support for the development and ongoing operation of the prepaid card program for one of the nation’s largest banks. This work has spanned several years and includes the development of commercial-facing and consumer-facing documentation, the analysis of legal and compliance issues, the negotiation of over 100 commercial agreements with business clients/partners/resellers, and the negotiation of vendor agreements, including several for multi-national distribution.
- Assisted a national retailer in the negotiation of its prepaid card distribution relationship—with the largest provider of those services.
- Represented a leading technology company in connection with regulatory issues associated with a suite of prepaid services offered by the company in conjunction with its bank partners.
Mobile payments: Represented a mobile payments start-up in all aspects of its novel payment product, including a soup-to-nuts evaluation of regulatory issues, state licensing, creation of cardholder documentation and disclosures and negotiation of agreements with banks and processors. We also assisted the client with the negotiation of distribution agreements with banks in India and Europe.
Social payments: Represented a social payments start-up in connection with the regulation of its in-game payment services, including through crafting consumer agreements and disclosures.
Private label, co-branded, agent bank and commercial credit card agreements: Represented retailers and banks in many of the leading private label and co-branded credit card program relationships around the U.S. and internationally.
Payment regulation: Provided guidance on a daily basis to clients on emerging issues in the payments space, including as relates to anti-money laundering compliance, money transmitter and other licensing issues, disclosures, error resolution issues, interchange regulation, remittance requirements and health care payments, to name just a handful of the issues facing clients involved in payment services.
Networks: Represent several of the leading credit, debit and ACH networks in the United States in connection with a diverse set of regulatory and transactional matters.