Legal Tips For Dealing With Your Core Processing Vendor

Core processing contracts are typically close to 100 pages of dense legal content with exhibits, schedules and addenda that allocate risks in favor of the processor and against the bank. The vendor wants your board to believe the terms are standard, and there is no opportunity to negotiate. Notwithstanding the complexity of the contract and the vendor's strong reluctance to make modifications, the following tips can help you to regain an element of control in managing this third-party relationship.

Know the Regulatory Expectations

As with any third-party engagement, review and consider the Interagency Guidance on Third-Party Relationships. Since your core processing agreement is likely one of your most critical contracts, consider documenting the steps you took in accordance with this guidance during your core processor relationship, including proposed redlines to the contract to incorporate contractual provisions recommended by the guidance. Your regulator will