PEP Episode 061 — Non-Competes Non-Solicits & Merchant Payments: What’s Really Enforceable | Contracts Matter

Non-Competes, Non-Solicits, and Your Bottom Line: What Every Payments Professional Must Know

The fine print in your payment processing agreements could be quietly limiting your earning potential, career mobility, and business growth—and you might not even realize it. When was the last time you scrutinized the restrictive covenant language buried inside your ISO, agent, or partnership agreements?

In this episode of The Payments Experts Podcast, produced by Global Legal Law Firm (https://www.globallegallawfirm.com/), our payments attorneys Christopher Dryden and Leo Arzumanyan join Jeremy Stock to break down the hidden legal risks behind non-compete and non-solicitation clauses—and why understanding enforceability is critical if you work anywhere in merchant services, fintech, or payments processing.

Why These Clauses Matter in Merchant Payments

In California, non-competes are prohibited—and non-solicitation provisions are generally unenforceable. But in states like Texas and Florida, certain restrictions are permitted—provided they’re narrowly tailored by geography, time, and business scope.
The problem? Many ISO and agent contracts ignore these limits entirely, embedding clauses that wouldn’t survive legal scrutiny but still succeed at intimidating professionals into compliance. Our experts explain how processors and ISOs sometimes leverage overreaching language to restrict competition, limit residual rights, and control relationships with merchants, sub-agents, and vendors.

Red Flags That Could Be Costing You Deals

We unpack troubling industry trends, including:

• Overbroad definitions of “affiliates,” “partners,” and “vendors” that make compliance nearly impossible.
• Restrictions that violate worker mobility rights, locking professionals out of opportunities with other processors, payment facilitators, or merchant portfolios.
• Clauses so expansive you could be in breach the moment you sign, even without realizing it.

Our attorneys share real-world cases where payment professionals unknowingly forfeited significant opportunities—or even residual streams—because of contractual traps buried deep in agreements.

Why Legal Review Is Essential for ISOs, Agents, and Fintech Leaders

In the rapidly evolving world of merchant payments and fintech, contract reviews are not a formality—they’re a strategic necessity. The balance between protecting legitimate business interests and preserving your professional freedom has never been more critical.
Understanding which provisions are enforceable—and which aren’t—can be the difference between growing your portfolio and being boxed out of the market.

Don’t Let Restrictive Contracts Control Your Future

Whether you’re an ISO negotiating a new processing agreement, an independent agent protecting your residuals, or a fintech leader scaling operations, this episode arms you with insights to negotiate smarter, secure your business interests, and protect your career mobility.

Subscribe to The Payments Experts Podcast and visit globallegallawfirm.com to get the knowledge you need to stay competitive in an industry where contract language often overreaches—and your freedom to operate is on the line.

*Matters discussed are all opinions and do not constitute legal advice. All events or likeness to real people and events is a coincidence.*

Transcript

Leo Arzumanyan (00:00):

Jeremy, as you can see, I’m sure you’re noticing a trend or a theme, which is like equity, right? We try to really make these equitable, and that kind of leads me to another provision that I always make sure to look out for, and that’s the importance of reviewing any non-solicit or non-compete language. There are two issues that I personally constantly see when I’m reviewing these agreements when it comes to non-solicit, non-compete. First is that a lot of the times, the agreement language is actually not the way they draft their non-competes are not even legal in the state that that agreement is being governed under. So California, for example, has very strict laws when it comes to,

Christopher Dryden (00:36):

There is no

Leo Arzumanyan (00:37):

There non-compete,

Christopher Dryden (00:38):

Except a very minor, just so anybody who works in California, just so you know, not only is there a prohibition on non-competes, non-competes include non-solicit.

Jeremy Stock (00:49):

Welcome to the Payments Experts podcast, a podcast of global legal law firm. We hope you enjoy this episode.

Christopher Dryden (01:04):

If you were a worker, and there’s a question whether it extends to independent contractors, but if you’re in California, there is no such thing as an independent contractor. Really. If you, for whatever reason, have a non-solicit throne at you, even that can probably be invalidated and most people don’t know. It’s just one of those things where there’s no issue. Now you go to another state, like Texas is a good

Leo Arzumanyan (01:33):

One, Texas, Florida,

Christopher Dryden (01:34):

Yeah. They actually have really precise non-compete statutes where it has to be limited in its temporal scope. Can’t be for too long, can’t be for too big of an area.

Leo Arzumanyan (01:46):

Has to be reasonable.

Christopher Dryden (01:47):

It has to be reasonable. So if you’re an ISO and you only do business in four states and you say that they can’t compete with you for a year nationwide, that’s not reasonable. So you have to pay attention to what’s coming at you, and you have to look at how broad the language is on the non-solicit. I always find that they’re just way too broad. That was the

Leo Arzumanyan (02:09):

Second issue I was bring up was that, so the first issue is that oftentimes they’re just drafted in a way that’s not actually enforceable under a certain state’s law. California, just being a great example of that. It’s funny, Chris mentions some of the examples of non reasonable are they try to prohibit any solicitation across the country. I’ve seen some where it’s across the entire world, they’re just prohibiting you from doing business anywhere on earth, I guess.

Christopher Dryden (02:33):

But that’s because they’re just grabbing contracts and they’re cobbling them together, or they’re using AI and they don’t know how to use ai. They dunno how to use

Leo Arzumanyan (02:41):

Ai.

Christopher Dryden (02:41):

And what they’re pulling down from AI are a bunch of clauses that might not actually assimilate with one another.

Leo Arzumanyan (02:50):

And so the second issue that I was going to say that I always see is that are too broad where they will just lay out such a long paragraph of all these different entities and parties that the agent cannot solicit. And again, not only does this violate a lot of state’s laws, it’s just far too broad and unenforceable. But my bigger issue is just these entities, these parties, they’re not even under the scope of what we’re doing here under this relationship. It’s the referred merchant that the agent should not be allowed to solicit away from the iso.

Christopher Dryden (03:23):

That’s like saying I go out and I resell for somebody who resells at and t and I can’t do any business with at and t ever on my own. Right? I mean, there’s just nonsensical terms in these agreements.

Leo Arzumanyan (03:36):

The

Christopher Dryden (03:36):

One that I always see is, so look, we live in a capitalist society, competition, anti-competition, statutes matter and competition promoted. When you basically tell me that I’m going to be in violation of a contractual provision for things that I don’t even know,

Leo Arzumanyan (03:54):

Right when they list any of my vendors,

Christopher Dryden (03:57):

I don’t know

Leo Arzumanyan (03:57):

Your vendors,

Christopher Dryden (03:58):

I don’t know your vendors, I don’t know your other merchants. I only know the people that I dealt with with you. I guess it’s probably better to say what is off limits.

Christopher Dryden (04:09):

What’s off limits is when you refer a merchant to your upstream vendor for a particular service, you can’t undo that. You’ve done it. You’ve created a contract. You have to abide by the contract so long as they continue to pay you. Now, if they materially breach the contract and they stop paying you for some BS reason, then at that point in time there’s a question of whether or not you can go and recapture that person. Another place that I see this is, it’s not just non-solicit, it’s also in confidential information. Everybody wants to say this is, oh, that’s my trade secret. That’s my confidential information. Really, your relationship with your acquiring bank, which is required to be disclosed that every potential offer to a merchant and on your website, that’s your confidential information. Really, it’s the ludicrousness of how people want to read these contracts to say that they’re enforceable. Alright, let’s talk to the judge because I’m not really interested in trying to convince you. What you’re saying is just horseshit right now.

Leo Arzumanyan (05:17):

And I really want to hone in on one of the things Chris said is you see it all the time with these non-solicit where they do list out so many different entities. The agent cannot solicit any of the vendors, affiliates, and affiliates isn’t defined. So does that mean any parties you’re affiliated with or does it mean a party that you own? They just list, they make it so broad where just by the agent entering into the agreement and executing the agreement, you might already start violating it from day one because you don’t know, maybe you’re already doing business with those parties.

Christopher Dryden (05:47):

Well, there’s another spot. I’ll finish on this one, but think about it from this perspective. Say I run a call center and that’s how I do my marketing, and I’m just buying legitimately lists of bonafide businesses to call on. I call, I give my pitch, maybe I have multiple calls, and finally the merchant on the other end says, you know what? I’ll send you my current merchant statements. It happens to be for somebody that you to partner with at that point in time, am I really, after I’ve spent money on good faith marketing and I learned right before I’m going to sign these people that they happen to be contracted at some point with these people over here, am I really? Now after I’ve done all this stuff supposed to not go forward, that’s a restraint on trade. I’m in free trade. I am doing things that I’m legitimately allowed to do.

Christopher Dryden (06:45):

I’m not using anything that you gave me. I have no idea that you have any relationship with this merchant. I mean, because the thing I’m, I’m a non-exclusive agent. I’m allowed to work with multiple people. What happens that I’ve signed these competing agreements that I’ve run up against somebody and now I’m in constant fear because, oh, I’m going to have my residual shut off because I went and took a merchant and I was able to give them a better deal over here. I think at a certain point, you’ve got to kind of find an agreement with the other side about that particular instance. I see the same thing with employees. Legitimately, you can’t work with somebody and then go and poach that person. That’s not something that you’re supposed to do. It’s just like you’re not supposed to poach your merchant absent material breach. I’ve even seen language in a contract that says, not only can you not solicit, not only can you not interfere with an existing relationship, you cannot hire, so we have worker mobility rights in this country. That’s a restraint on free trade. You’re basically robbing a worker of their ability to go and apply for a job that’s publicly listed. Really, you’re telling me I can’t hire that person. So that’s where Leo’s really good is he rolls into these restrictive covenants and just carves ’em up.

Leo Arzumanyan (08:13):

And on that point, in the more extreme examples, not only do they have language where you can’t hire anyone from the iso, but again, they do that whole same thing, laundry list of you can’t hire from the ISOs employees, the ISOs subsidiaries employees, the ISOs affiliates, vendors. Again, we don’t know who your vendors are. We don’t know who these affiliates are, and you’re just restricting freedom of employment across so many different avenues. And this Jeremy is why I think this podcast is so important because really, you got to review your agreements. You’ve got to anticipate problems so that you can alleviate issues down the road.

Jeremy Stock (08:50):

Thank you for listening to this episode of the Payments Experts Podcast, a podcast of global legal law firm. Visit us online today at global legal law firm.com.