In the world of payments, businesses may encounter unique challenges based on their industry, financial history, or business model. When traditional payment processors deem a business as high risk, a high-risk merchant account becomes essential. This blog post aims to provide a detailed understanding of high-risk merchant accounts, their definition, how they work, the differences […]
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By Post:
Data Protection Commission, 21 Fitzwilliam Square South, Dublin 2, DO2 RD28
By Phone: 076 110 4800 / 057 868 4800
Merchant Bank is responsible for providing settlement funds directly to Merchant, and Processor shall not have access to or hold settlement funds.
(a) Visa and MasterCard. If appropriately indicated herein, Merchant shall be a Limited Acceptance Merchant, which means that Merchant has elected to accept only certain Visa and MasterCard card types as indicated on the Merchant Application, or via later notification. Bank has no obligation other than those expressly provided under the Operating Rules and applicable law as they may relate to Limited Acceptance. Bank’s obligations do not include policing card types at the point of sale. Merchant will be solely responsible for the implementation of its decision for limited acceptance including but not limited to policing the card type(s) of transactions at the point of sale submitted for processing by Bank. Should Merchant submit a transaction for processing for a card type it has indicated it does not wish to accept, Bank may process that transaction and Merchant will pay the applicable fees, charges, and assessments associated with that transaction.
3.2 Operating Procedures for Transactions.
3.3 Submission of Valid Transactions.
(a) Merchant will submit to Bank a Transaction only if the Transaction is made or approved by the Cardholder who is issued the Card used for the Transaction. Merchant will not submit directly or indirectly:
(a) any Transaction that Merchant knows or should have known to be fraudulent or not authorized by the Cardholder;
MERCHANT’S WARRANTIES. Upon signing the Merchant Application, and each time Merchant submits a Transaction, Merchant represents and warrants that:
5.1 Transaction Receipts. Merchant will retain in a secure and confidential manner original or complete and legible copies of each Transaction Receipt, and each Credit Transaction Receipt required to be provided to Cardholders, for at least two (2) years or longer if required by law or the Operating Rules. Merchant shall render all materials containing Cardholder Account Numbers unreadable prior to discarding.
5.2 Storage. Merchant will store Transaction Receipts and Credit Transaction Receipts in an area limited to selected personnel, and when record-retention requirements have been met, Merchant will destroy the records so that the same are rendered unreadable.
5.3 Merchant Servicers and Agents. Merchant must notify Bank and receive Bank’s approval prior to engaging any Merchant Servicer or Agent in connection with Merchant’s acceptance of Cards or the submission of Transactions to Bank. Merchant shall provide Merchant Bank and Processor at least sixty (60) days advance written notice of Merchant’s election to use a Merchant Servicer or Agent. Merchant Bank and/or Processor may individually approve or deny the use of a Merchant Servicer or Agent in their sole and absolute discretion and at any time. If a Merchant Servicer or Agent is required to certify, register, or act in any fashion pursuant to the Operating Rules, Merchant shall cause such Merchant Servicer or Agent to cooperate with Merchant Bank in completing any steps required for registration and/or certification and/or action. Merchant is solely responsible for any and all applicable fees, costs, expenses and liabilities associated with such registration and/or certification and/or action. Bank shall in no event be liable to Merchant or any third party for any actions or inactions of any Merchant Servicer or Agent used by Merchant, and Merchant hereby expressly assumes all such liability. Merchant will immediately notify Bank if Merchant decides to use electronic authorization or data capture terminals provided by any entity other than Bank or its authorized designee (“Third Party Terminals”) to process Transactions, including leasing a terminal from a third party. If Merchant elects to use Third Party Terminals: (a) the third party providing the terminals will be Merchant’s Merchant Servicer in the delivery of Transactions to Bank; and (b) Merchant assumes full responsibility and liability for any failure of that third party to comply with the Operating Rules, applicable laws, rules or regulations or this Merchant Agreement. Bank will not be responsible for any losses or additional fees incurred by Merchant as a result of any error by a third party agent or a malfunction in a Third Party Terminal.
5.4 Security. Merchant agrees and shall ensure that Merchant Servicers and Agents utilized by Merchant provide the same levels of security as those required of Merchant, and that such Merchant Servicers and Agents transmit data in accordance with: (a) the required format(s) of the Card Associations; (b) the Operating Rules; and (c) the requirements of Bank. Merchant must have a written contract between the Merchant and its Agent or between the Merchant and the Merchant Servicer that stipulates adherence to the provisions of such information security requirements. Merchant shall indemnify and hold Merchant Bank and Processor harmless against losses or damages arising from the acts or omissions of Merchant Servicers or Agents engaged by Merchant.
5.5 Loss or Theft. Merchant must immediately notify Merchant Bank and Processor of any suspected or confirmed loss or theft of materials or records that contain Cardholder Account Numbers or Card Transaction information. In the event of a suspected or confirmed loss or theft Merchant shall provide immediate access to all facilities, systems, procedures, equipment, and documents as may be deemed appropriate by Bank or its designated representatives for inspection, audit, and copying as deemed appropriate by both Merchant Bank and Processor in their individual sole discretion. Merchant shall be responsible for all costs associated with such inspection, audit, and copying however such costs may occur.
5.6 Merchant authorizes Bank to release its name and address to any third party whom the Bank determines needs to know such information in order for Bank to perform the Card Program services under this Merchant Agreement and who has requested such information.
5.7 Merchant will not: (a) provide Cardholder Account Numbers, personal Cardholder information or Transaction information to anyone except Bank, the Card Associations, or Merchant’s Merchant Servicers or Agents for the purpose of assisting Merchant in completing Card Transactions, or as specifically required by law; (b) retain or store Card Magnetic Stripe, CVV, CVV2, CVC2 or CID data (including Track Data) subsequent to Authorization for a Transaction; (c) sell, purchase, provide or exchange Card Account Number information to any third party without the Cardholder’s consent, or to any entity other than Merchant’s Merchant Servicers or Agents, Bank, the Card Associations, or in response to valid legal process or subpoena; or (d) release any Cardholder information over the telephone under any circumstances.
5.8 Merchant may not in any event, including its failure, including bankruptcy, insolvency, or other suspension of business operations, sell, transfer, or disclose any materials that contain Cardholder Account Numbers, personal information or Transaction information to third parties. In the event that Merchant’s business fails or ceases to exist, Merchant is required to return to Bank all such information or provide proof of destruction of this information to Bank.
5.9 Merchant agrees to establish security procedures to protect Cardholder information and comply with the Visa Cardholder Information Security Program (CISP), MasterCard’s Site Data Protection (SDP) Program, Discover Information Security Compliance (DISC), Security Requirements, and the Payment Card Industry data security standards. The Card Associations or Bank, and the respective representatives, may inspect the premises of Merchant or any Merchant Servicer or Agent engaged by Merchant for compliance with security requirements. Merchant acknowledges that any failure to comply with security requirements may result in the imposition of restrictions on Merchant or the permanent prohibition of Merchant’s participation in Card acceptance programs by the Card Associations. Merchant shall indemnify and hold Bank harmless against any losses or damages arising from Merchant’s failure to comply with security procedures, Merchant’s acts or omissions that result in a breach of data security, or Merchant’s non-participation in any breach security program Processor may offer.
7.1 Compliance With Laws. Merchant will comply with all Requirements of Law and regulations, including but not limited to laws and regulations regarding anti-money laundering compliance, in completing Transactions, submitting them to Bank, performing its obligations under this Merchant Agreement, and otherwise conducting its business.
7.2 Change in Name or Business. Merchant will give Merchant Bank and Processor at least thirty (30) days’ prior written notice before any change in Merchant’s name or location, any change in ownership or management of Merchant’s business, any sale, assignment, rental, lease or transfer of ownership of any location that accepts Cards, or any material change in information concerning Merchant in the Merchant Application, and material change in the type or nature of the business carried out by Merchant or otherwise required to be provided to Bank.
7.3 Other Processors. Merchant agrees that it will not participate in a Card Program with another financial institution or processor without Bank’s written approval.
8.1 Reports About Merchant. From time to time, Bank may obtain credit and other information on Merchant, owners of Merchant and officers of Merchant, from others (such as customers and suppliers of Merchant, lenders and credit reporting agencies), and furnish information on Merchant’s relationship with Bank and Bank’s experience with Merchant to others seeking the information.
8.2 Reports from Merchant. Merchant will provide Bank with updated business and financial information concerning Merchant, including financial statements, tax returns, evidence of required licenses and other information and documents Bank may reasonably request from time to time. Merchant shall further provide Bank such information as it may request for the making of insurance claim, regulatory or other filings related to Merchant’s activity pursuant to this Agreement. All material marked “confidential” which Bank receives from Merchant will be used only by Bank or Card Association in performing the Card Program services under this Merchant Agreement or related services and reporting. At any reasonable time, Bank, any Card Association or any other entity having authority has the right to audit Merchant’s records relating to this Merchant Agreement. Without limiting the generality of the foregoing, Merchant understands and agrees that if, at the time of signing this Merchant Agreement Merchant is undergoing a forensic investigation, Merchant must notify Bank and fully cooperate with the investigation until it is completed.
9.1 Assignment. This Merchant Agreement is binding upon the successors and assigns of Bank and Merchant. Merchant will not assign this Merchant Agreement to another entity without Bank’s prior written consent and any purported assignment made without Bank’s consent will be void.
9.1 Bankruptcy.
10.1 Amendments. Unless otherwise provided for in this Merchant Agreement, Bank may amend this Merchant Agreement at any time by providing Merchant with fifteen (15) days’ prior notice by: (a) sending Merchant written notice of such amendment, or (b) posting such amendment to the Processor web site and providing Merchant with electronic notice as provided in Section 2.3. The amendment will become effective unless Bank receives Merchant’s notice terminating this Merchant Agreement before the effective date. Bank may amend this Merchant Agreement upon less than fifteen (15) days’ prior notice if Bank reasonably determines immediate modification is required by Requirements of Law, Operating Rules or any adverse change in Merchant’s financial condition. Amendments submitted by Merchant will bind Bank only if in writing and approved and signed by Bank’s authorized officer.
10.2 Waivers. Bank’s failure to enforce this Merchant Agreement will not waive Bank’s rights under this Merchant Agreement. Waivers of any provision of this Merchant Agreement must be in writing and signed by Bank. A waiver in one instance will not apply to other occasions unless that intent is clear from the signed waiver.
11.1 Term/Renewal. The initial term of this Merchant Agreement shall be for the term of three (3) years (the “Initial Term”) commencing on the date this Merchant Agreement is executed by authorized officers of Merchant Bank and Processor. At the expiration of the Initial Term, this Merchant Agreement will automatically renew for successive one (1) year periods (each a “Renewal Term” and collectively with the Initial Term the “Term”) unless a party provides the other parties with notice of its intent not to renew this Merchant Agreement at least ninety (90) days prior to the expiration of the then current term.
(c) Termination for Cause by Merchant. Merchant may terminate this Merchant Agreement in the event of a material breach of the terms of this Merchant Agreement by Bank, provided Merchant gives Bank written notice of any alleged breach and such breach remains uncured for a period of thirty (30) days following receipt of written notice by the Bank.
(e) Merchant Bank’s or Processor’s rights of termination under this Merchant Agreement are cumulative. A specific right of termination shall not limit any other right of Bank to terminate this Merchant Agreement expressed elsewhere in this Merchant Agreement. Notice of termination may be given orally or in writing, and if given orally, shall be confirmed in writing.
(f) Upon termination, Merchant’s rights to complete Transactions and submit them to Bank, and to use Transaction form or formats, promotional material and any other items provided by Bank, will cease. Termination of this Merchant Agreement will not terminate the rights and obligations of Merchant and Bank relating to acts or omissions occurring before termination, including for example, any Processing Fees or other service fees owed to Bank, any Transactions processed for Merchant by Bank (whether before or after termination), Merchant’s Chargeback and indemnity obligations, and the Security Interest granted to Bank in this Merchant Agreement.
(g) It is understood that a file for terminated merchants referred to as “MATCH” is maintained by Card Associations containing the names of any business (and its principals) which have been terminated for certain reasons, including fraud, depositing excessive counterfeit paper, excessive unauthorized transactions, depositing paper for others (laundering), bankruptcy or breach of this Merchant Agreement. Merchant acknowledges that Merchant Bank or Processor is required to report Merchant to the MATCH (and/or on the Consortium Merchant Negative File (the CMNF) published by Discover® Network if this Merchant Agreement is terminated for any of the foregoing reasons or other reasons as may be modified by the Card Associations. Merchant agrees and consents to such reporting in the event of the termination of this Merchant Agreement for any of the foregoing reasons.
(h) Sections 2.3, 3, 4, 5, 6, 7, 9.1, 10.2, 11, 12, 13, 14, 15, 17, 18, 19, and 20 will survive termination of this Merchant Agreement.
12.1 Settlement Account Required. Merchant must maintain a Settlement Account in Merchant’s name in satisfactory condition at a depository institution under arrangements acceptable to Bank. The Settlement Account will be subject to the provisions of Section 14 of this Merchant Agreement.
12.2 Minimum Balance. Merchant agrees to maintain a minimum balance of funds in the Settlement Account as Bank may specify to Merchant in writing from time to time.
12.3 Provisional Credits. Subject to the terms and conditions of this Merchant Agreement, Merchant Bank agrees to provisionally credit Merchant for each Transaction that Bank accepts from Merchant. Merchant agrees that Merchant Bank may charge the Settlement Account for the amount of any Transaction processed under this Merchant Agreement, or any agreement Bank may have with any Merchant Affiliate that results in a Chargeback, or for any Credit Transaction Receipt or other reimbursement or Processing Fees to which Bank may be entitled.
12.4 Audits and Adjustments. Merchant agrees that Bank may audit all Transaction calculations and that Merchant Bank shall have the right, without notice, to make withdrawals, deposits, or other adjustments to or from the Settlement Account for any deficiencies or overages.
12.5 Errors and Disputes. Bank shall presume that any amounts the Bank pays to or debits from Merchant are correct unless Merchant disputes these by sending Bank written notice within thirty (30) days of the date of the applicable statement containing any disputed payments or debits.
12.6 POS Equipment. If Merchant chooses to rent or lease POS Equipment from Processor or utilizes software provided by Processor for use in processing Transactions, Merchant agrees to pay Processor: (a) a pre-determined monthly rental fee; (b) any initial upfront costs as required; and (c) all applicable taxes for such POS Equipment or software utilization.
12.7 Settlement Account Closure. If the Settlement Account is closed, Merchant Bank or its designated representative may terminate this Merchant Agreement, effective immediately, upon written or oral notice (with written confirmation in the event of oral notice) unless Merchant opens another Settlement Account acceptable to Bank. Merchant may change the Settlement Account upon prior written approval by Bank, which approval will not be unreasonably withheld.
12.8 ACH Authorization. Merchant authorizes Merchant Bank or its agents or designated representatives to initiate debit and credit entries and adjustments to the Settlement Account or the Reserve Account (described in Section 13 of this Merchant Agreement) through the ACH settlement process for amounts due under this Merchant Agreement. This authorization will remain in full force and effect until termination of the Merchant Agreement and the full and final payment of all obligations of Merchant due under this Merchant Agreement. Merchant agrees to be bound by all applicable terms and provisions of the ACH Rules or other applicable association or network, in effect from time to time. Merchant acknowledges and agrees that Bank will not be liable for any delays in receipt of funds, any failure by Merchant to receive funds, or errors in debit or credit entries caused by Merchant, or third parties, including but not limited to any Card Association or any financial institution.
13.3 Deductions from Reserve Account. If funds are not available in the Settlement Account, Bank without prior notice to Merchant may deduct from the Reserve Account any obligation of Merchant to Bank under this Merchant Agreement, including all Processing Fees, Chargebacks, Credit Transaction Receipts, Damages, and any and all additional fees, and sums sufficient to reimburse Bank for the amount of any fines, penalty amounts and charges due the Card Associations.
13.4 Replenishment of Reserve Account Deficiencies. Whenever the balance in the Reserve Account is less than the minimum balance required, or is otherwise deficient, Merchant Bank may, without prior notice, deposit the deficiency into the Reserve Account by reducing any payment to Merchant required by this Merchant Agreement or deduct the deficiency from the Settlement Account or any other deposit account of Merchant with another depository institution (including accounts of general partners if Merchant is a partnership) and deposit it into the Reserve Account. Merchant authorizes deductions from its accounts by ACH entry, sight draft, preauthorized check, reverse wire, or otherwise as Bank deems appropriate under the circumstances. In addition, Merchant will deposit any deficiency into the Reserve Account within one (1) Business Day after receiving Bank’s oral or written request. Without limiting Bank’s remedies, Merchant’s failure to deposit any deficiency on time will permit Bank, without advance notice, to suspend or cease processing additional Transaction Receipts and Credit Transaction Receipts. Bank will give Merchant written notice of any suspension or cessation of processing.
13.5 Additions to Reserve Account. If Bank has reason to believe that Merchant may be liable to customers or to Bank for Chargebacks exceeding the balance in the Reserve Account, Merchant Bank may: (a) immediately place in the Reserve Account payments due to Merchant and/or stop processing transactions for Merchant until such time as the extent of Merchant’s obligations to Bank, or Merchant’s liability for Chargebacks, or Merchant’s liability to customers are known, and Bank no longer deems itself insecure, and/or (b) demand from Merchant an amount that in Bank’s judgment is needed to ensure payment of Merchant’s obligations and liabilities. Merchant’s failure to pay any amount will permit Merchant Bank or Processor or its designated representative to terminate this Merchant Agreement immediately without advance notice.
13.6 Reserve Account After Merchant Agreement Terminates. Merchant Bank may continue to hold or deposit funds in the Reserve Account after termination of this Merchant Agreement, regardless of whether termination is by Merchant or Bank. Upon termination of the Merchant Agreement by Merchant or Bank, Bank may retain sufficient funds to satisfy any and all Processing Fees, Chargebacks, Credit Transaction Receipts, Damages, and any and all additional fees, and sums sufficient to reimburse Bank for the amount of any fines, penalty amounts and charges due the Card Associations. If no funds have been deposited into the Reserve Account before termination, Bank, at Bank’s option, may notify Merchant to deposit funds into the Reserve Account upon termination of this Merchant Agreement. All provisions which apply to a pre-termination Reserve Account will apply after termination, including replenishment of deficiencies. The funds will be held by Bank or its designated agent for a period of not less than one hundred eighty (180) days from the date of the last Transaction processed under the Merchant Agreement, plus the period of any warranty, guarantee, and/or return policy on goods and/or services sold.
14.1 Merchant’s Grant of Security Interest.
14.2 Perfection of Security Interest. Upon request of Bank, Merchant will execute one or more financing statements or other documents to evidence the security interests granted to Bank under this Section 14. Merchant shall cooperate with Bank in obtaining any control agreement or similar agreement with a depository bank necessary to perfect the security interests granted herein. In addition, Merchant agrees that its signature on the Merchant Application will be considered Merchant’s signature agreeing to any control agreement as defined in Article 9 of the Uniform Commercial Code among Merchant, Bank and any other financial institution under which Bank, Merchant and any other financial institution agree to the disposition of funds in the Settlement Account, the Reserve Account or any other deposit account without further consent by Merchant.
CUSTOMER CLAIMS. To the extent that Bank has paid or may pay a Chargeback or Credit Transaction Receipt, Merchant will be obligated to reimburse Bank for any sums Bank pays. If Merchant does not reimburse Bank, Bank will have all of the rights and remedies of Cardholders, including the Cardholders’ rights under 11 U.S.C. §507(a)(6). Bank may assert any claim on behalf of a Cardholder individually or on behalf of all Cardholders as a class.
17.2 Limitation of Liability. Bank will not accept responsibility for errors, acts, or failure to act by others, including but not limited to, Merchant Servicers, Agents, third party suppliers of software, equipment or services; or, banks, communication common carriers, data processors or clearinghouses through which transactions may be passed, originated and/or authorized. Bank will not be responsible for any loss, liability or delay caused by fires, earthquakes, war, civil disturbances, power surges or failures, acts of governments, acts of terrorism, labor disputes, failures in communication networks, legal constraints or other events beyond the control of Bank. Bank undertakes no duties to Merchant other than the duties expressly provided for in this Merchant Agreement, and any and all other or additional duties that may be imposed upon Bank in law or equity are hereby irrevocably waived and released to the maximum extent permitted by law. In any event, Bank’s cumulative liability to Merchant, whether arising in contract, tort (including, without limitation, negligence and strict liability) or otherwise, shall not exceed the lesser of $10,000 or, an amount equal to the aggregate of monthly net Processing Fees paid by Merchant in the three (3) month period prior to the month that the incident giving rise to liability occurred. IN NO EVENT SHALL BANK BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES OR FOR ANY INTERRUPTION OR LOSS OF USE, DATA, BUSINESS OR PROFITS, WHETHER OR NOT SUCH LOSS OR DAMAGES WERE FORESEEABLE OR BANK WAS ADVISED OF THE POSSIBILITY THEREOF AND REGARDLESS OF WHETHER ANY LIMITED REMEDY HEREIN FAILS OF ITS ESSENTIAL PURPOSE. BANK SPECIFICALLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE SERVICES PROVIDED HEREUNDER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BANK DOES NOT GUARANTEE OR WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR ERROR-FREE.
NOTICES. Each notice required by this Merchant Agreement will be in writing (hard copy or electronic) and will be effective when delivered, (i) to Merchant Bank at the address designated on the Merchant Application, and the return address on the Merchant’s Card processing statements, (ii) to Processor at the address designated on the Merchant Application and (iii) to Merchant at Merchant’s address to which Bank mails Merchant’s statements or at the electronic mail address provided by Merchant in the Merchant Application, or at such other address as any party may provide by written notice to the other parties. Any address Merchant designates may also be the address to which Bank mails Merchant’s statements. Delivery by facsimile transmission or electronic mail will be considered effective when the sender receives electronic confirmation of the transmission.
19.1 Attorney Fees. Merchant and/or Guarantor will be liable for and will indemnify and reimburse Bank for all attorneys’ fees and other costs and expenses paid or incurred by Bank in the enforcement of this Merchant Agreement or in matters relating to this Merchant Agreement, or arising from any breach by Merchant of this Merchant Agreement, or any other wrongdoing by Merchant or Guarantor. In the event Bank must collect any amounts due from Merchant to Bank, Merchant will reimburse Bank for all fees and expenses incurred in such collection, plus reasonable administrative fees.
19.2 Arbitration. Merchant, Bank and any Guarantor at Bank’s election will settle any dispute or controversy concerning or relating to this Merchant Agreement through binding arbitration before a single arbitrator, held at Denver or Boulder, Colorado in accordance with the provisions of the Colorado Uniform Arbitration Act or any successor statute. If Merchant and/or any Guarantor does not unconditionally proceed with arbitration in accordance with this Section 20.02 within ten (10) days after Bank sends a written demand for arbitration, Bank shall be entitled (but not obligated) to initiate litigation concerning the dispute or controversy.
FINAL AGREEMENT; EFFECTIVE DATE. This Merchant Agreement is the complete and final agreement between Merchant and Bank for the Card Program services covered by this Merchant Agreement and supersedes all prior or contemporaneous negotiations, stipulations or agreements. If any provision of this Merchant Agreement is invalid or unenforceable, the other provisions remain effective. This Merchant Agreement becomes effective when the Merchant Application is signed and approved by Bank.
