Payments

Overview

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, payment facilitators, 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, B2B and social payment regimes, as well as the growing role of bitcoin and other digital currencies, 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, anti-money laundering, economic sanctions, 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, virtual currencies, prepaid products, B2B payments 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, including in connection with examination and enforcement activity; 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. Where licensing is unavoidable, we assist clients in multi-state licensing efforts.

International Counseling

We have an extensive international payments practice acting for clients with European, Asian and other international operations, as well as for clients based in the U.S. or elsewhere that want to establish financial services businesses in the EU, Asia or elsewhere 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 Directives. 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.

Contracts

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:

Representative Matters

Joint ventures and strategic relationships:

Represented numerous banks, retailers and affinity partners in the creation of private label and co-branded payment card programs.
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 provision 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.

Acquisitions:

Represented PayPal (and eBay prior to the spinoff of PayPal) in connection with a series of acquisitions involving multiple disciplines, including payments regulation, telecommunications regulation and intellectual property rights, as well as support from multiple international offices, including acquisitions of TIO Networks, Xoom, Braintree/Venmo, Paydiant, Zong, and Modest. Some of these transactions involved obtaining regulatory change in control approvals on a multi-state basis.
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 Mastercard on regulatory issues in its investment in AvidXchange.
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 numerous buyers and sellers of credit card portfolios in connection with the transfer of billions of dollars of credit card assets.
Representing private equity and venture capital funds in connection with licensing and other regulatory issues arising out of investment in entities engaged in payment-related activities.

Prepaid products:

Represented one of the largest U.S. banks in the sale of its global prepaid card business.
Provided full-service legal support for the development and ongoing operation of the prepaid card program for a large U.S. prepaid card program manager, including the development of commercial-facing and consumer-facing documentation, the analysis of legal and compliance issues, the negotiation of hundreds of 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 leading mobile wallet providers in connection with their relationships with bank providers of prepaid, funds transfer and financing solutions and with associated regulatory issues.
Represented a mobile payments startup 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.

Bitcoin and other Virtual Currencies:

Represented merchants and payment processors in assessing risks and compliance issues associated with acceptance and processing of bitcoin payments.
Advised investors in entities involved in different types of bitcoin activities.
Advised the issuer of a centrally issued virtual currency on regulatory and contract matters for the launch of its payments infrastructure.
Advised investment advisor clients on establishment of virtual currency funds.

Social payments: Represented a social payments startup in connection with the regulation of its in-game payment services, including through crafting consumer agreements and disclosures.

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, economic sanctions, money transmitter and other licensing issues, disclosures, error resolution issues, interchange regulation, remittance requirements and healthcare payments, to name just a handful of the issues facing clients involved in payment services.
Assessed the regulatory obligations of payment facilitators for “payfacs” and their processors.
Represent clients in responding to money transmitter licensing and anti-money laundering compliance examinations.
Assessed risks of participation in new faster payments networks.

Networks: Represent several of the leading credit, debit, faster payments and ACH networks in the United States in connection with a diverse set of regulatory and transactional matters.