Long-time Green Sheet Advisory Board member Adam Atlas established his law firm in 2003 as a boutique commercial firm dedicated to top-tier personal service to clients. As his company took off, he specialized in payments and shared his expertise with readers of The Green Sheet. His column has been a popular staple of our Education section for more than a decade.
In this interview, Atlas, who said he loves the blended challenge of having to deliver excellent legal product and also be creative for clients, discusses his professional evolution, the industry's growing complexity, the line between payment processing and money transmission, and more.
I was raised by a single mom who had to sue for basic and necessary support for our family. She won every time. That experience made me a believer in the justice system and attracted me to law. Later on, in high school and university, I was on debating teams, which gave me a taste for civilized arguments on two sides of a given issue. Finally, doing a bachelors' degree in political science served as the final launching pad for entry into law.
Most of the people in my family are scientists, so law and business was all new to me. My first work as a lawyer was with a large corporate law firm, which was great. When you start your practice at a big firm, you get to see files that you would not normally see at smaller firms. This broadens your horizons as a new lawyer. At first, I saw myself continuing on the large firm, corporate law track. Then I met a payments guy.
Somewhere around 1999, a client of mine said he had a friend who needed an incorporation done. That incorporation blossomed into a substantial ISO business from which I learned a lot about payments; the company is known today as Pivotal Payments. I no longer act for them, but learned a lot from working for them in the early days of their business. I remain on very good terms with the founder.
After working for payments businesses from inside a large corporate firm for a few years, I decided back in 2003 to start my own practice with payments as the focus. Back then, I had only a couple clients and wasn't sure if I could work for only payments companies. I actually planned on having a second specialization in immigration law. Thankfully, in 13 years of practice, I only did about three or four immigration files and the other 1,000 have been payments.
These days, it's hard to find a startup that does not have a payments angle. Having been advising on commercial and regulatory matters related to payments for over 10 years, I am able to quickly situate a new startup in the commercial and regulatory context – which is quite complicated.
Some payments lawyers focus on ISOs and acquiring, while others focus on money services businesses (MSBs), while our practice has evolved to cover both of these niches, as well as virtual currency businesses.
It's hard to say exactly what keeps me in payments, but I think it is mostly the fact that the constant change in the field requires the best of me both as a lawyer and as a nonlegal business adviser to clients. Clients in this space need a specific blend of legal savvy and creativity that is not for everyone. I enjoy the challenge of delivering legal work that is both technically correct and also satisfies the need for creative (and legal) solutions to problems. Payments keeps me on my toes, and that's really a privilege.
A lot of payment providers do not have a strong sense of the line between payment processing and money transmission. The challenge here is that most lawyers don't know the difference either, and some regulators are also grappling with the difference.
In simplistic terms, a payment processor usually accepts funds as an agent of the payee, while a money transmitter accepts funds on behalf of the payer. Classic payment processing is a merchant account provided by a processor and acquiring bank, while classic money transmission is sending money to relatives overseas using a money remittance service.
Payment processing has traditionally not been subject to state MSB licensing, while money transmission is subject to state MSB licensing. With the ever-changing ways of doing payments, fitting into one or another category is not really broadly known.
If I could make one recommendation to payment providers, it would be to ask the simple question: What would happen if your whole processing float disappeared? Who would sue you? If it's the senders/payers, you are more likely an MSB and required to get registered and licensed nationally. If it's the recipients/payees, you are less likely to be an MSB. This is a very simplistic test, but every payment company should ask itself that question and consult qualified payments counsel. Being an MSB without the right registrations and licenses can have devastingtingly bad consequences, including prison.
They are much more complex. In the old days (that is, before 2010) we worried mostly about two- or three-party relationships with money flowing in one direction. Now, we worry about thousands of interlocking relationships with payments flowing in all directions. The industry has grown in complexity by many multiples. This evolution mirrors the evolution and disruption in most other industries. None of it is surprising anymore, but that does not make it any less challenging.
It's passé to say that people should know what bitcoin is. A better thing to say would be that payment participants should understand blockchain technology and the amazing opportunities that it offers to all kinds of business models, not just payment providers.
It may surprise readers, but my geographic location has never been a factor. Although based in Canada, my legal work involves mostly U.S. entities having nothing to do with Canada. Occasionally, we assist in cross-border payments matters for entities expanding northward or southward. Our firm is the only firm of which we are aware that offers full support for payments businesses in both the U.S. and Canada, within the limitations of my qualifications. … Once in a while, I am called out for saying "eh" at the end of a sentence or saying "prow-cessor" instead of the U.S. "praw-cessor," but other than that, being a Canadian makes no difference.
The Green Sheet is a cornerstone of the acquiring industry; it's been a privilege to provide content to it over the years. I often get emails or calls from readers referring to a specific article with a follow-up question or discussion. For me, this says that The Green Sheet is read and taken seriously by readers. That motivates me to put that much more effort into my writing.
I also try hard to not write in legalese (despite the column title, Legal ease). I want all readers to quickly understand what I am writing, precisely because my articles are about legal issues but written in plain English. Folks who are new to acquiring should start by reading The Green Sheet; they will be a lot less green for it. Pardon the pun.
The feedback is often positive, and the questions are great because it means readers have gained interest in the topic. One article, called "How to negotiate a non-compete with a gorilla," spurred a new client to fly me to Miami and start a relationship that unfolded over a number of years advising their payments business.
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