Commercial Bank of California Terms and Conditions
Updated April 2024
Terms & Conditions
This Merchant Processing Agreement (this “Agreement”) is for merchant card payment processing services between the MERCHANT that signed the Merchant Application (“Merchant”) and Commercial Bank of California, (“ Bank”). Bank is the principal party to this Agreement and
is responsible for enabling the Merchant to accept payments.
DEFINITIONS
“ACH” means the Automated Clearing House paperless electronic funds transfer (EFT) system controlled by the Federal Reserve Board and governed by the National Automated Clearing House Association (“Nacha”).
“Affiliate” means a Person that, directly or indirectly, (i) owns or controls a party to this Agreement or (ii) is under common ownership or control with a party to this Agreement.
“Agreement” means the Merchant Application, the Guaranty and these Terms and Conditions, and any supplementary documents referenced herein, and schedules, exhibits and amendments to the foregoing.
“American Express” means the Cards bearing the Marks of, and Card Brand operated by, American Express Travel Related Services Company, Inc., or its Affiliates.
“Authorization” means a computerized function or a direct phone call to a designated number to obtain approval from the Card Issuer to charge the Card for the amount of the sale in accordance with the terms of this Agreement and the Rules.
“Card” means (i) a Credit Card, (ii) a Debit Card; or (iii) any other valid credit card or debit card; such as but not limited to a prepaid card, gift card or stored value card, or other payment device approved by Bank and accepted by Merchant.
“Card Brand” means Visa U.S.A., Inc., Mastercard International, Inc., American Express Travel Related Services Company, Inc., DFS Services LLC (the owner of Discover) and their Affiliates, or any other payment networks issuing Credit Cards or Debit Cards, approved by Bank that provide Cards accepted by Merchant.
“Card Issuer” means the financial institution or company which has provided a Card to a
Cardholder.
“Card Not Present” or “CNP” means that an Imprint of the Card is not obtained at the point-of-sale or it is an eCommerce transaction
“Cardholder” (sometimes referred to as “Card Member” in certain Card Brand materials) shall mean any person authorized to use the Cards or the accounts established in connection with the Cards.
1.11. “Cardholder Information” means any non-public, sensitive information about a Cardholder or related to a Card, including, but not limited to, any combination of Cardholder name plus the Cardholder’s social security number, driver’s license or other identification
number, or credit or debit card number, or other Bank account number, Card Verification Value (CVV) code, track data contained in the magnetic stripe, Personal Identification Number (PIN), PIN Block, and Europay, MasterCard, and Visa (EMV) chip data.
“Chargeback” means the procedure by which a Transaction (or Disputed portion thereof) is returned to Bank by a Card Issuer for any reason, including, but not limited to, cases where such item does not comply with the applicable Rules.
“Credit Card” means any card validly issued by a Card Brand, other than Debit Cards.
“Credit Voucher” means a document executed by a Merchant evidencing any refund or price adjustment relating to Cards to be credited to a Cardholder account.
“Debit Card” means a debit card validly issued by the debit card networks and a card in the form validly issued under license from a Card Brand that accesses a consumer’s asset; i.e., checking account within 14 days of purchase, including but not limited to stored value, prepaid, payroll, EBT, gift, and Visa consumer check cards.
“Discover Card” means a Card bearing the Discover Marks and accepted as part of the DFS Services Network.
“Dispute” is the process by which a Cardholder does not recognize a charge on their account and requests a chargeback, which may be granted by their issuing Bank.
“Guarantor” has the meaning set forth on the Merchant Application.
“Guaranty” has the meaning set forth on the Merchant Application.
“Imprint” means (i) an impression on a Transaction Record manually obtained from a Card through the use of an imprinter, or (ii) the electronic equivalent obtained by swiping a Card through a terminal and electronically capturing Card data and printing a Transaction Record.
“Law” means all applicable local, state, and federal statutes, regulations, ordinances, rules, and other binding laws, as the same may be enacted or amended from time to time.
“Merchant Application” means the Application for Merchant Card Processing.
“Operating Account” means a commercial checking or demand deposit account maintained by Merchant for the crediting of collected funds and the debiting of fees and charges under this Agreement.
1.23. “Person” means an individual, corporation, partnership, sole proprietorship, trust, association or any other legally recognized entity or organization, other than Merchant or Bank.
“Rules” means all rules, regulations, by-laws, standards, and procedures adopted and/or amended from time to time by the Card Brands (including, without limitation, the Payment Card Industry Data Security Standard), Bank and each relevant Card Issuer and Nacha, when applicable.
“Services” means the activities undertaken by Bank or third party processor to authorize, process and settle Card transactions undertaken by Cardholders at Merchant’s location(s), and all other services provided by Bank under this Agreement.
“Transaction” means any sale of products or services, or credit for such, from a Merchant for which the Cardholder makes payment through the use of any Card and which is presented to Bank for collection.
“Transaction Record” means evidence of a purchase, rental or lease of goods or services by a Cardholder from, and other payments to, Merchant using a Card, including preauthorized orders and Recurring Transactions (unless the context requires otherwise), regardless of whether the form of such evidence is in paper or electronic form or otherwise.
“Voice Authorization” means a direct phone call to a designated number to obtain credit approval on a Transaction from the Card Issuer, whether by voice or voice-activated systems.
CARD ACCEPTANCE
Honoring Cards: Merchant will accept all valid Cards when properly presented by Cardholders in payment for goods or services, subject to applicable Rules requiring Merchant to elect whether it will accept credit only, debit only or both debit and credit cards also referred to as limited acceptance. Merchant’s election is set forth in the Merchant Application. Except to the extent explicitly provided by the Rules, Merchant may not establish minimum or maximum amounts for Card sales as a condition for accepting any Card. Merchant shall not engage in any acceptance practice that discriminates against or discourages the use of a Card Brand’s Cards in favor of any other Card Brand’s Cards, or favor any particular Card Issuer over any other Card Issuers.
a) Except to the extent permitted by both Law and the Rules, and as authorized in writing by Bank, Merchant shall not apply an additional charge for accepting Cards as an alternative to other payment methods (referred to at times as a “surcharge”). It is a material breach of this Agreement to assess surcharges in violation of Rules or Law. Merchant is advised to consult with its own legal counsel regarding the implementation of a surcharging program. Bank expressly disclaims any liability arising out of or relating to the implementation of any surcharge program by Merchant. If Merchant wishes to assess surcharges, as that term is used in the Rules of Visa and Mastercard, then Merchant must abide by the following requirements, which are
contractual, and do not excuse or supersede compliance with Rules or Law: (i) at least 30 days prior to implementing any surcharge program, Merchant must inform Bank of the intent to surcharge; (ii) Merchant may assess surcharges only on credit cards; (iii) the surcharge may not be greater than 3% of the transaction value or the cost of card acceptance, whichever is lower;
(iv) the surcharge must be clearly and conspicuously disclosed at the point of sale and at the point of entry. For physical merchant outlets, the point of entry is where customers enter the store, and the point of sale is where the customer checks out or pays. For e-commerce transactions, the point of entry is the first page of your website that references the credit card brands accepted, and the point of entry is the checkout page. For mail order transactions, the point of entry is the first page of the catalog that references the card brands accepted, and point of sale is the mail order form; (v) the disclosure must (1) state that the surcharge is being assessed by Merchant on credit cards only, (2) identify the amount of the surcharge; and (3) state that the surcharge is not greater than the cost of accepting the card; (vi) the Cardholder who has been notified of a surcharge must be given the opportunity to cancel the transaction prior to being assessed the surcharge and to pay by another means that does not result in a surcharge; (vii) Merchant must not assess a surcharge in any jurisdiction that prohibits surcharging payment cards. These jurisdictions change from time to time, but as of December 2023, prohibited jurisdictions include Connecticut, Maine, Massachusetts, and Oklahoma; (viii) Merchant must prominently display and disclose to Cardholders at all times the name of the Merchant and Merchant’s physical address; (ix) Merchant shall maintain a written refund policy and shall disclose such policy to Bank and all its customers (including customers making purchases online by displaying such policy on the website), which policy and disclosure shall be consistent with Law and the Rules. The amount of any refund shall not exceed the original Transaction except to the extent a Merchant agrees to reimburse a Cardholder for return shipping; (x) subject to Law and the Rules, Merchant agrees to preserve receipts, credit vouchers, or other written evidence related to Transactions for not less than two (2) years following such Transaction and to provide such records to Bank and/or Bank upon request; (xi) Bank reserves the right to block, discontinue, or otherwise require modifications to any surcharge program Merchant has implemented if necessary to comply with Rules or Law.
Advertising: Subject to the Rules, Merchant will prominently display the promotional materials provided by Bank in its place(s) of business. Merchant’s use of promotional materials and use of any trade name, trademark, service mark or logo type (collectively, the “Marks”) associated with a Card is limited to informing the public that the Card will be accepted at
Merchant’s place(s) of business. During the term of this Agreement, Merchant may use promotional materials and Marks pursuant to and in strict compliance with the terms of this Agreement and the Rules. Upon notification by any Card Brand or Bank, or upon termination of this Agreement, Merchant shall discontinue the use of such Card Brand’s Marks and return any inventory or promotional materials to Bank. Merchant may not use any promotional materials or Marks associated with the Card Association in any way which suggests or implies that a Card Brand endorses any goods or services other than Card payment services. Merchant’s website, if
any, must prominently display the name of the Merchant and the name that will appear on the Cardholder statement.
Card Acceptance: Merchant may only accept transactions within the United States in which the Bank is licensed to operate. When accepting a Card, Merchant will follow the steps and guidelines set forth in the Rules or otherwise provided by Bank from time to time for accepting Cards and in particular, will: (a) determine in good faith and to the best of its ability that the Card is valid on its face; (b) obtain Authorization from the Card Issuer to charge the Cardholder’s account; (c) comply with the additional terms set forth in this Agreement with respect to Telephone Orders, Mail Orders, Internet, Preauthorized Orders and Installment Orders and with respect to any Card Not Present Transactions; (d) document the approved Transaction in accordance with this Agreement and the Rules; and (e) deliver a true and completed copy of the Transaction Record to the Cardholder at the time the goods are delivered or services performed or, if the Transaction Record is prepared by a point-of-sale terminal, at the time of the sale. Except to the extent otherwise provided for in this
Agreement, each Transaction Record must contain the following information: (i) Merchant’s
legal name and/or registered trade name, Merchant’s location, and the Merchant’s merchant identification number designated by the Bank; (ii) the truncated version of the Card number as provided in the Rules; (iii) a brief description of the goods or services involved in the Transaction; (iv) the selling price, together with applicable taxes, other charges or gratuities, and the total amount of the Transaction; (v) signature of the Cardholder or authorized user as described in this Agreement, if applicable, date of the Transaction and the Transaction approval number; (vi) any additional requirements of the Card Brands that may be applicable to specific merchant or transaction types, as amended from time to time; and (vii) such additional information which may from time to time be required by Bank, the Card Brands, or Card Issuers. Merchant will not transmit a Transaction Record to Bank until such time as: (i) the Transaction is completed; (ii) the goods or services have been shipped or provided, except as set forth in this Agreement and the Rules; or (iii) a Cardholder consent is obtained for a Recurring Transaction in accordance with terms of this Agreement and the Rules.
Authorization: Merchant will obtain an Authorization for all Transactions using a means approved by Bank. If Merchant cannot, for any reason, obtain an electronic Authorization through the use of a terminal, Merchant will request a Voice Authorization from Bank’s designated authorization center and will legibly print the authorization number on the Transaction Record. Merchant will not obtain or attempt to obtain Authorization from Bank’s authorization center unless Merchant intends to submit to Bank a Transaction for the authorized amount if Authorization for the Transaction is given. Merchant may not divide a single Transaction between two or more Transaction Records on a single Card to avoid Authorization limits that may be set by the Card Issuer. Merchant acknowledges that an Authorization provides only that the Cardholder account has sufficient credit available at the time of Authorization to cover the amount of the current sale and that an Authorization is not a guarantee that the Transaction will not be subject to dispute or Chargeback and does not
warranty the Cardholder’s identity. Merchant may not attempt to obtain an authorization by successively decreasing the sale amount. Bank may refuse to process any Transaction Record
presented by Merchant: (a) unless a proper authorization number or approval code has been recorded on the Transaction Record; (b) if Bank determines that the Transaction Record is or is likely to become uncollectible from the Cardholder to which the Transaction would otherwise be charged; or (c) if Bank has reason to believe that the Transaction Record was prepared in violation of any provision of this Agreement or the Rules. Merchant will use, and may not circumvent, fraud identification tools requested by Bank, including address verification system processing and CVV2 processing, and acknowledges that the use of these tools may prevent Merchant from accepting certain Cards as payment. Merchant acknowledges that its use of fraud identification tools may not prevent fraudulent Card usage, and agrees that any fraudulent Transaction may ultimately result in a Chargeback, for which Merchant retains full liability under this Agreement.
Multiple Transaction Records; Partial Consideration: Merchant may not prepare more than one Transaction Record for a single sale or for a single item, but will include all goods and services purchased in a single Transaction in the total amount on a single Transaction Record except under the following circumstances: (a) for purchases in separate departments of a multiple department store; (b) for partial payment, installment payment, delayed delivery or an advance deposit; or (c) for delayed or amended charges governed by Rules for travel and entertainment merchants and related Transactions.
Telephone Orders, Mail Orders, Internet, Preauthorized Orders and Installment Orders: Unless Merchant has been approved by Bank to accept mail, internet or telephone orders, Merchant warrants that it is a walk-in trade business, located in a retail business place where the public moves in and out freely in order to purchase merchandise or obtain services. If Merchant is not approved by Bank for Card Not Present Transactions and Bank determines Merchant has accepted unapproved Card Transactions which are placed by telephone, generated through telephone solicitation, mail order, internet sales or other means that is not a card present Transaction, this Agreement may be immediately terminated by Bank and the value of all Transaction Records collected from the first day of processing may be charged back to Merchant and all funds therefrom held as provided in Article IV of this Agreement. Unless approved by Bank, this Agreement does not contemplate regular acceptance of Cards for sales accepted by mail, internet, or telephone nor through preauthorized orders. Regardless of whether Merchant has been approved by Bank for Card Not Present Transactions, Merchant assumes all responsibility for identification of the Cardholder and the validity of the Card information for Card Not Present Transactions.
Lodging and Vehicle Rental Transactions: For lodging and vehicle rental Transactions, Merchant must estimate and obtain Authorization for the amount of the Transaction based upon the Cardholder’s intended length of stay or rental. Additional Authorization must be obtained and recorded for charges actually incurred in excess of the estimated
amount. Regardless of the terms and conditions of any written preauthorization form, the Transaction Record amount for any lodging or vehicle rental Transaction must include only that portion of the sale, including any applicable taxes, evidencing a bona fide rental of real or personal property by Merchant to the Cardholder and may not include any consequential
charges. Nothing contained herein is intended to restrict Merchant from enforcing the terms and conditions of its preauthorization form through means other than a Transaction.
Returns and Adjustments; Credit Vouchers: Merchant’s policy for the exchange or return of goods sold and the adjustment for services rendered will be established and posted in accordance with the Rules of the applicable Card Brands. Merchant will disclose, if applicable, to a Cardholder before a Transaction is made, that if merchandise is returned: (a) no refund, or less than a full refund, will be given; (b) returned merchandise will only be exchanged for
similar merchandise of comparable value; (c) only a credit toward purchases will be given; or (d) special conditions or circumstances apply to the sale (e.g., late delivery, delivery charges, or other non-credit terms). If Merchant does not make these disclosures, a full refund in the form of a credit to the Cardholder’s Card account must be given. Merchant must not refund the customer with cash or a different Card that the original Transaction was made. Merchant will ensure its return policy is clearly disclosed on the Transaction Record or on Merchant’s website. Any change in Merchant’s return or cancellation policy must be submitted in writing to Bank not less than 14 days prior to the change. Bank may refuse to process any Transaction Record made subject to a revised return or cancellation policy of which Bank has not been notified as required herein.
Cash Payment: Merchant may not receive any payments from a Cardholder for charges included in any Transaction resulting from the use of any Card nor receive any payment from a Cardholder to prepare and present a Transaction for the purpose of effecting a deposit to the Cardholder’s account.
Cash Advances; Scrip Purchases: Unless otherwise approved in advance by Bank, Merchant may not deposit any Transaction for the purpose of obtaining or providing a cash advance either on Merchant’s Card or the Card of any other party and may not accept any Card at a scrip terminal, and either action will be grounds for Bank’s immediate termination of this Agreement.
Duplicate Transactions: Merchant may not deposit duplicate Transactions. Bank may debit Merchant for any adjustments for duplicate Transactions and Merchant is liable for any Chargebacks resulting therefrom.
Deposit of Fraudulent Transactions: Merchant may not accept or deposit any fraudulent or unauthorized Transactions and may not under any circumstances present for processing or credit, directly or indirectly, a Transaction which originated with any other merchant or any other source other than Transactions arising from bona fide purchases from Merchant for the goods and services for which Merchant has been approved under this Agreement. If Merchant deposits any such fraudulent or unauthorized Transaction, Bank may:
(a) immediately terminate this Agreement; (b) withhold funds and demand an escrow as provided in this Agreement; or (c) report Merchant to the applicable Card Brand. Merchant’s employees’ and agents’ actions are chargeable to Merchant under this Agreement.
2.14. Data Security/Personal Cardholder Information: Except as otherwise provided by the Rules, Merchant may not, as a condition of sale, impose a requirement on Cardholders to provide any personal information as a condition for honoring Cards unless such information is required to provide delivery of goods or services or Merchant has reason to believe the identity of the person presenting the Card may be different than that of the Cardholder. Merchant will not, under any circumstances, release, sell or otherwise disclose any Cardholder Information to any person other than Bank or the applicable Card Brand, except as expressly authorized in writing by the Cardholder, or as required by Law or the Rules.
Safeguards. Merchant will maintain appropriate administrative, technical and physical safeguards for all Cardholder Information. These safeguards will (i) ensure the confidentiality of Cardholder Information; (ii) protect against any anticipated threats or hazards to the security or integrity of Cardholder Information; (iii) protect against unauthorized access to or use of Cardholder Information that could result in substantial harm or inconvenience to any Cardholder; and (iv) properly dispose of all Cardholder Information to ensure no unauthorized access to Cardholder Information. Merchant will maintain all such safeguards applicable to Merchant in accordance with applicable Laws and the Rules including Privacy Laws.
Compliance with Rules. Merchant represents, warrants and covenants that it is and will remain throughout the Term of this Agreement in compliance with (i) Rules related to data security, data integrity and the safeguarding of Cardholder Information, including the Payment Card Industry Data Security Standard (“PCI DSS”) including, Discover Information Security Compliance (“DISC”), MasterCard’s Site Data Protection Program (“SDP”), the American Express Data Security Requirements (“DSR”), and Visa’s Customer Information Security Program (“CISP”), in effect and as may be amended, supplemented or replaced from time to time, and
(ii) any data security guidelines or operating guide that Bank may provide to Merchant, as the same may be amended, supplemented or replaced from time to time. Merchant will cause all of its service providers, subcontractors, and agents to comply with PCI DSS SDP, DISC, DSR and CISP requirements and any data security guidelines or operating guide provided by Bank at all times. Merchant will report any non-compliance immediately to Bank. To accomplish the foregoing, Merchant will encrypt all debit, credit, or stored value card numbers whether in storage, transport or backup and will not store data security codes on its systems, network, or software. Merchant may not store in any system or in any manner discretionary Card read data including without limitation CVV data, PIN data, address verification data or any other information prohibited by Rules.
Annual Certification. Merchant will provide an annual certification to Bank (in a form acceptable to Bank) certifying compliance with the data security provisions of this Agreement, including compliance with applicable Card Brand requirements such as PCI DSS, SDP, DSR and CISP. Merchant will provide annual certifications for Merchant’s service providers, subcontractors, and agents upon request.
Information Use Limitations. Merchant may not sell, disclose, or otherwise make Cardholder Information available, in whole or in part, in a manner not provided for in this
Agreement, without Bank’s prior written consent. Merchant may, however, disclose Cardholder Information to its service providers, subcontractors and agents who have a need to know such information to provide the services described in this Agreement, provided that those individuals or entities have assumed confidentiality obligations in accordance with this Agreement, or when such disclosure is required by legal process or applicable Law, and Merchant and its relevant service provider, subcontractor, or agent have entered into a written agreement containing Merchant’s and such individual’s or entity’s agreement to the foregoing data security provisions, including compliance with the Rules.
Response to Unauthorized Access. Merchant will notify Bank within twenty-four (24) hours after it becomes aware of any actual or potential breach in security resulting in an unauthorized access to Cardholder Information. Merchant will provide any assistance that Bank, Card Issuer, regulators, governmental authority, or any Card Brand deems necessary to contain and control the incident to prevent further unauthorized access to or use of Cardholder Information. Such assistance may include, but not be limited to, preserving records and other evidence, and compiling information to enable Bank and the issuing Bank(s) or the Card Brand to investigate the incident and provide assistance and cooperation to: (i) file suspicious activity reports (as applicable); (ii) notify their regulators (as applicable); and (iii) notify the affected Cardholder (as required). Unless the unauthorized access was due to Bank’s acts or omissions, Merchant will bear the cost of notifying the affected Cardholder.
Miscellaneous. Merchant may not make a claim against Bank or hold Bank liable for the acts or omissions of other merchants, service providers, Card Issuers, Card Brands, financial institutions, or others that do not have a written contractual relationship with Bank or over which Bank has no control. These provisions supplement, augment and are in addition to obligations of indemnification, audit, confidentiality, and other similar provisions contained in this Agreement. This Section and each of its subsections will survive this Agreement’s termination. Merchant agrees that Bank may disclose to any Card Brand information regarding Merchant and Merchant’s Transactions to any Card Brand, and that such Card Brand may use such information to perform its responsibilities in connection with its duties as a Card Brand, promote the Card Brand, perform analytics and create reports, and for any other lawful business purposes, including commercial marketing communications purposes within the parameters of Card Brand Card acceptance, and transactional or relationship communications from a Card Brand. A Card Brand may use the information about Merchant obtained in this Agreement at the time of setup to screen and/or monitor Merchant in connection with the Card Brand marketing and administrative purposes. Merchant agrees it may receive messages from a Card Brand, including important information about Card Brand products, services, and resources available to its business. These messages may be sent to the mailing address, phone numbers, email addresses or fax numbers of Merchant. Merchant may be contacted at its wireless telephone number and the communications sent may include autodialed short
message service (SMS or “text”) messages or automated or prerecorded calls. Merchant agrees that it may be sent fax communications.
Merchant Obligations
(a) Compliance with Laws and Rules. Merchant will comply with and conduct its Card activities in accordance with all Laws and Rules including rules regarding usage of card brand marks, acceptance, risk management, transaction processing, products, programs, or services the Merchant is required to or chooses to participate. Merchant may not: (a) accept Cardholder payments for previous Card charges incurred at the Merchant location; (b) require a Cardholder to complete a postcard or similar device that includes the Cardholder’s account number, card expiration date, signature, or any other card account data in plain view when mailed; (c) add any tax to transactions, unless applicable Law expressly requires that Merchant be permitted to impose a tax (any tax amount, if allowed, must be included in the transaction amount and not collected separately); (d) enter into interchange any Transaction Record for a Transaction that was previously the subject of a Chargeback to Bank and subsequently returned to Merchant, irrespective of Cardholder approval (Merchant may pursue payment from the Cardholder outside the Card Brand system); (e) request or use an account number for any purpose other than as payment for its goods or services; (f) disburse funds in the form of travelers cheques, if the sole purpose is to allow the Cardholder to make a cash purchase of goods or services from Merchant; (g) disburse funds in the form of cash, unless: (i) Merchant is a lodging or cruise line merchant disbursing cash to a Cardholder, (ii) Merchant is dispensing funds in the form of travelers cheques, Cards, or foreign currency, or (iii) Merchant is participating in the Card Brand cash back service; (h) accept a Card for manual cash disbursement; (i) accept a Card to collect or refinance existing debt that has been deemed uncollectible by Merchant providing the associated goods or services; (j) enter into a Transaction that represents collection of a dishonored check; (k) accept a Card for an unlawful Internet gambling transaction (Reg GG); (l) accept a transaction that does not result from an act between the Cardholder and the Merchant known as Transaction Laundering; or (j) accepting Cardholder payments for debt repayment that do not comply with the Rules. Merchant will pay all Card Brand fines, fees, penalties and all other assessments or indebtedness levied by Card Brand to Bank which are attributable, at Bank’s discretion, to Merchant’s Transaction processing or business. The Card Brand may require that Bank limit Merchant’s participation in the applicable Card Brand and/or terminate this Agreement.
Employees. Merchant is responsible for the actions of all of its employees while in
Merchant’s employ.
PCI DSS Compliance. As stated above, Merchant must be in compliance with the PCI DSS and have the ability to demonstrate compliance.
Merchant’s Business: Merchant will notify Bank immediately if it intends to (a) transfer or sell any substantial part of its total assets, or liquidate; (b) change the basic nature of its business, including selling any products or services not related to its current business; (c) change ownership or transfer control of its business; (d) enter into any joint venture, partnership or similar business arrangement whereby any person or entity not a party to this Agreement assumes any interest in Merchant or Merchant’s business; (e) alter in any way Merchant’s approved monthly volume, average, or maximum ticket; (f) changes its return policies or to another fulfillment house different from those identified in Merchant Application;
or (g) changes to its Operating Account. Merchant will notify Bank promptly in writing if it becomes subject to any voluntary or involuntary Bankruptcy or insolvency petition or proceeding. Merchant’s failure to provide notice as required above may be deemed a material breach and will be sufficient grounds for termination of the Agreement and for Bank’s exercise of all its rights and remedies provided by this Agreement. If any change listed above occurs, Bank may immediately terminate this Agreement.
Merchant’s Representations and Warranties: Merchant represents and warrants that:
(a) all information contained in the Merchant Application or any other documents delivered to Bank in connection therewith is true and complete and properly reflects Merchant’s business, financial condition and principals, partners, owners or officers (as applicable); (b) Merchant has power to execute, deliver and perform this Agreement, and this Agreement is duly authorized, and will not violate any provisions of Law, or conflict with any other agreement to which Merchant is subject; (c) Merchant holds all licenses, if any, required to conduct its business and is qualified to do business in every jurisdiction where it is required to do so; and (d) there is no action, suit or proceeding at law or in equity now pending or, to Merchant’s knowledge, threatened by or against or affecting Merchant which would substantially impair its right to carry on its business as now conducted or adversely affect its financial condition or operations.
Merchant’s Covenants: Merchants covenants that: (a) each Transaction Record presented to Bank for collection is genuine and is not the result of any fraudulent activity, or a Transaction prohibited by a Card Brand, or is not being deposited on behalf of any business other than Merchant as authorized by this Agreement; (b) each Transaction Record is the result of a bona fide purchase of goods or services from Merchant by the Cardholder in the total amount stated on the Transaction Record; (c) Merchant will perform all of its obligations to the Cardholder in connection with the Transaction evidenced thereby; (d) Merchant will comply with Bank’s procedures for accepting Cards, and the Transaction itself will not involve any element of credit for any other purposes other than as set forth in this Agreement, and will not be subject to any defense, dispute, offset or counterclaim which may be raised by any Cardholder under the Rules, the Consumer Credit Protection Act (15 USC §1601) or other Law; and any Credit Voucher which Merchant issues represents a bona fide refund or adjustment on a Transaction by Merchant with respect to which a Transaction Record has been accepted by Bank.
Third Parties: Merchant may desire to use a third-party service provider to assist Merchant with its Transactions. Merchant shall not utilize any such third parties unless Merchant has disclosed such use to Bank previously in writing, and unless such third party is fully compliant with all Laws and Rules and certified as compliant with the PCI DSS or a similarly established data security standard. Any third party used by Merchant must be registered with the Card Brand prior to the performance of any contracted services on behalf of
Merchant. Further, as between the parties to the Agreement, Merchant will be bound by the acts and omissions of any third-party service provider, and Merchant will be responsible for compliance by such third-party service provider with this Agreement, all Laws and
Rules. Merchant will indemnify and hold harmless Bank from and against any loss, cost, or
expense incurred in connection with or by reason of Merchant’s use of any third parties, including third-party service providers. Bank is not responsible for any third-party service provider used by Merchant, nor is Bank required to process any Transaction which Bank receives from Merchant or its service providers in any format not approved by Bank. Bank has no responsibility for, and shall have no liability to Merchant in connection with, any hardware, software or services Merchant receives subject to a direct agreement (including any sale, warranty, or end-user license agreement) between Merchant and a third party.
Recurring Transactions: If Merchant agrees to accept a recurring transaction from a Cardholder for the purchase of goods or services which are delivered or performed periodically (a “Recurring Transaction”), the Cardholder shall complete and deliver to Merchant a paper or online order form containing a written request for such goods or services to be charged to the Cardholder’s account, the frequency of the recurring charges and the duration of time for
which such Cardholder’s permission is granted. In the event a Recurring Transaction is renewed, the Cardholder shall complete and deliver to Merchant a subsequent order form for continuation of such goods or services to be charged to the Cardholder’s account. A Recurring Transaction may not include partial payments made to Merchant for goods or services purchased in a single Transaction, nor may it be used for periodic payments of goods or services on which Merchant assesses additional finance charges. A copy of the order form must be retained for the duration of the recurring charges and provided in response to Bank’s
request. In addition, Merchant must record, retain, and promptly produce upon request the “ship to address” and address verification service code (where applicable) for each transaction. Merchant must not complete an initial or subsequent Recurring Transaction after receiving a cancellation notice from the Cardholder, the Card Issuer, Bank or other party or a response that the Card is not to be honored.
Forensic Investigations: The merchant, if undergoing a forensic investigation at the time the Agreement is signed, must fully cooperate with the investigation until completed.
Merchant Prohibitions: (a) Illegal Transactions. Submitting any transaction into the payment system that is illegal or that the merchant knows or should have known was illegal. Transactions must be legal in both the cardholder’s and merchant jurisdiction. (b) Written Cardholder Information. A merchant or its agent may not request or store the Card Verification Value (CVV) data on any paper order form.
Visa-specific Rules:
(a) Right to Terminate. Visa has the right to require Bank to limit or terminate this Agreement with the Merchant.
(b) Use of Competitors. The Bank will not prohibit a merchant from using terminal processing services offered by competitors to deliver Visa transactions captured at the point-of-transaction directly to VisaNet for clearing and settlement (only applicable in the United States).
(b) Use of Third-Party Processors. Merchant may designate a third-party processor as its agent for the direct delivery of transactions to VisaNet for clearing and settlement. In order to designate such a third-party processor, Merchant: (1) must advise the Bank that it will use a third-party processor; (2) acknowledges and agrees that the Bank must reimburse the Merchant only for the Visa transactions delivered by that third party processor to VisaNet; and
(3) assumes responsibility for any failure by its third party processor to comply with the Visa rules.
PRESENTMENT; PAYMENT; CHARGEBACKS
Acceptance: Bank will accept from Merchant all Transaction Records deposited by Merchant under the terms of this Agreement and will present the same to the appropriate Card Issuers for collection against Cardholder accounts. Merchant must transmit Transaction Records and Credit Vouchers to Bank or its processing vendor on the same or next business day immediately following the day that such Transaction Records and Credit Vouchers have been originated. All presentment and assignment of Transaction Records, collection therefor and reassignment or rejection of such Transaction Records are subject to the terms of this Agreement and the Rules. Bank will only provisionally credit the value of collected Transaction Records to Merchant’s Operating Account and reserves the right to adjust amounts collected to reflect the value of Chargebacks (actual and anticipated), fees, penalties, late submission
charges, reserve deposits, negative Transaction Record batch deposits and items for which Bank did not receive final payment. The Bank will hold and control all funds related to Merchant acceptance, including settlement funds, reserves, suspended settlement, and other funds. No other entity is permitted to directly access or hold Merchant funds, whether from settlement or reserves.
Endorsement: By presenting Transaction Records to Bank for collection and payment, Merchant agrees to sell and assign all its right, title and interest in each Transaction Record completed in conformity with Bank’s acceptance procedures. Merchant’s presentment of Transaction Records to Bank constitutes an endorsement by Merchant to Bank of such Transaction Records. Bank may supply such endorsement on Merchant’s behalf.
Prohibited Payments: Bank may receive payment of any Transaction Record presented by Merchant and paid by Bank unless and until there is a Chargeback. Unless specifically authorized in writing by Bank, Merchant may not collect or attempt to collect any Transaction Record, including Chargebacks, and will hold in trust for Bank and promptly deliver in kind to Bank any payment Merchant receives, in whole or in part, of the amount of any accepted Transaction, together with the Cardholder’s name and account number and any corresponding accompanying payment.
Chargebacks: Merchant will accept responsibility for all Chargebacks related to
Merchant’s Transactions. Accordingly, Merchant will be liable to Bank in the amount of any Transaction disputed by the Cardholder or Card Issuer for any reason under the
Rules. Merchant authorizes Bank to offset from funds due to Merchant or to debit the
Operating Account or, if applicable, the Reserve Account for the amount of all Chargebacks. Merchant agrees to fully cooperate with Bank in complying with the Rules
regarding all Chargebacks. Merchant may not initiate a sale Transaction in an attempt to collect a Chargeback. Merchant will pay the current published fees for each Chargeback as listed on the Merchant Application and any other fines, fees, or assessments imposed by any Card Brand or Card Issuer as a result of Chargeback activity.
Reserve Account: Notwithstanding anything to the contrary in this Agreement and in addition to any other legal rights or remedies available to Bank, Bank may establish (without notice to Merchant) a non-interest bearing reserve account at Bank (the “Reserve Account”) for all future indebtedness of Merchant to Bank, its Affiliates, or the Card Brands that may arise out of or relate to the obligations of Merchant under this Agreement, including, but not limited to, Chargebacks and fees, in such amount as Bank from time to time may determine in its sole discretion. Bank may fund the Reserve Account by deducting amounts from payments due to
Merchant, by effecting a charge against Merchant’s Operating Account or against any of Merchant’s accounts at Bank, or by demanding payment from Merchant (which payment
Merchant shall make within 10 days after receipt of any such demand). All decisions relating to whether to establish, set the amount of, or increase the Reserve Account will be in the sole discretion of Bank. The Reserve Account will be maintained for a minimum of nine months after the date on which this Agreement terminates or until such time as Bank determines that the release of the funds to Merchant is prudent, in the best interest of Bank, and commercially reasonable based on anticipated risk of loss to Bank, and that Merchant’s account with Bank is fully resolved. Until the expiration of the period referenced in the preceding subsection, Merchant shall have no ownership interest in or right to the Reserve Account. Rather, the Reserve Account shall be the exclusive property of Bank. Furthermore, Merchant shall have no right to receive interest on any funds maintained in the Reserve Account, which shall be the exclusive property of Bank. The provisions of this Agreement relating to account debits and credits apply to the Reserve Account and survive this Agreement’s termination until Bank terminates the Reserve Account. Any balance remaining after Chargeback rights have expired and all of Bank’s other anticipated expenses, losses and damages have been paid will be disbursed to Merchant.
Merchant Statement: At least once each month, Bank shall provide a statement (the
“Merchant Statement”) to Merchant, which may be made available online. . Merchant shall be solely responsible for reviewing each Merchant Statement and for reporting to Bank in writing, within thirty (30) days of receipt of the Merchant Statement, any problems or irregularities appearing on such Merchant Statement —including, without limitation, underpayments, overpayments, or other discrepancies of any items, fees, charges, or liability assessments reflected thereon or related to the period covered by such Merchant Statement, including, without limitation, discrepancies between the volume and/or value of transactions that Merchant actually processed during the period indicated by the Merchant Statement. Merchant Statements provided online shall be deemed received the first day they are available online.
MERCHANT ACKNOWLEDGES AND AGREES THAT BANK SHALL NOT BE LIABLE OR OTHERWISE RESPONSIBLE TO MERCHANT, AND SHALL HAVE NO OBLIGATION TO REIMBURSE MERCHANT,
FOR ANY UNDERPAYMENT TO MERCHANT OR OTHER DISCREPANCY THAT IS NOT REPORTED TO BANK IN WRITING WITHIN THIRTY (30) DAYS OF MERCHANT’S RECEIPT OF THE APPLICABLE MERCHANT STATEMENT.
TERMINATION; EFFECT OF TERMINATION
Term: This Agreement will be effective once Bank accepts it and, unless otherwise terminated, will continue for a period of 3 years (the “Initial Term”) with automatic 3-year renewal terms thereafter (each a “Renewal Term,” and together with the Initial Term, the “Term”) unless and until Merchant provides written notice of non-renewal to Bank not less than 90 days before the end of the then-current Term. All existing obligations, warranties,
indemnities, and agreements with respect to Transactions processed before such termination shall remain in full force and effect, and, regardless of any such termination, Merchant shall remain liable for all obligations to Cardholders and Bank that are arising out of, relating to, or resulting from, either directly or indirectly from this Agreement.
Termination:
Without Cause. Bank may terminate this Agreement, without cause, upon 30 days’ advance
written notice to Merchant.
For Cause. Bank may terminate this Agreement in its sole discretion, effective
immediately, upon written or verbal notice, or by closing Merchant’s account, if Bank reasonably determines that any of the following conditions exists: (i) Merchant has violated any provision of this Agreement or Bank is otherwise entitled to terminate this Agreement pursuant to any provision of this Agreement; (ii) there is a material adverse change in Merchant’s financial condition; (iii) if any case or proceeding is commenced by or against Merchant, its Affiliates or principals under any Law dealing with insolvency, Bankruptcy, receivership or other debt relief; (iv) any information which Merchant provided to Bank, including in the Merchant Application, was false, incomplete or misleading when received; (v) at any time during the Term, Merchant has had a monthly ratio of Chargebacks to total Transactions and/or reported fraud exceeding Card Brand requirements; (vi) an overdraft in the Operating Account exists for more than 3 days; (vii) Merchant or any of Merchant’s officers or employees has been involved in processing Transactions arising from fraudulent or otherwise unauthorized Transactions; (viii) Merchant is or will be unable or unwilling to perform its obligations under this Agreement or applicable Laws or the Rules; (ix) Merchant has failed to timely pay Bank any amount due; (x) Merchant has failed to promptly perform or discharge any obligation under its Operating Account or the Reserve Account; (xi) any of Merchant’s representations or warranties made in connection with this Agreement was not true or accurate when given; (xii) Merchant has defaulted on any agreement it has with Bank; (xiii) Bank is served with legal process seeking to attach or garnish any of Merchant’s funds or property in Bank’s possession, and Merchant does not satisfy or appeal the legal process within 15 days of such service; (xiv) any Rules are amended in any way so that the continued existence of this Agreement would cause Bank to be in breach of those Rules; (xv) any guaranty supporting Merchant’s obligations is revoked,
withdrawn, terminated or altered in any way; (xvi) if any circumstances arise regarding Merchant or its business that create harm or loss of goodwill to any Card Brand; (xvii) termination is necessary to prevent loss to Bank or Card Issuers; (xviii) Merchant’s type of business indicated on the Merchant Application or as conducted by Merchant could endanger Bank’s safety or soundness; (xix) Merchant’s owner, officer, Guarantor, or corporate entity has a separate relationship with Bank and that relationship is terminated; (xx) Merchant appears on any Card Brand’s security reporting; or (xxi) Bank’s security for repayment becomes impaired.
Effect of Termination; Early Termination Fee. If this Agreement is terminated, regardless of cause, Bank may withhold and discontinue the disbursement for all Cards and other Transactions in the process of being collected and deposited. If this Agreement is terminated for cause, Merchant acknowledges that Bank may be required to report Merchant’s business name and the names and other identification of its principals to various Card Brand and industry databases, including the Terminated Merchant File and the Merchant Alert to Control High Risk Merchants File (“MATCH”). Merchant expressly agrees and consents to such reporting if Merchant is terminated for any reason requiring listing on the MATCH
file. Merchant waives and will hold harmless Bank from any claims that Merchant may raise as a result of Bank MATCH file reporting. Upon termination of the Agreement, Merchant will immediately cease requesting Authorizations. If Merchant obtains any Authorization after termination, the fact that any Authorization was requested or obtained will not reinstate this Agreement. Further, Merchant will return all Bank property, forms, or equipment. All obligations for Transactions prior to termination (including payment for Chargebacks and Bank’s expenses relating to Chargebacks) survive termination. Bank is not liable to Merchant for damages (including prospective sales or profits) due to termination. The parties agree that if this Agreement is terminated before completion of the Term for any reason other than a material uncured breach by Bank, Merchant will pay Bank an early termination fee in the amount set forth in the Merchant Application as liquidated damages. Merchant agrees that the early termination fee is not a penalty but a reasonable computation of the financial harm caused by the early termination of this Agreement, which amount would otherwise be difficult to calculate. The early termination fee is in addition to, and not in lieu of, any other damages or sums to which Bank may be entitled unrelated to the early termination of this Agreement.
Upon termination, any amounts due to Bank will accelerate and be immediately due and payable, without any notice, declaration, or other act whatsoever by Bank.
Effect of Bankruptcy: Any account or security held by Bank will not be subject to any preference, claim or stay by reason of Bankruptcy or similar Law. The parties expressly agree that the acquisition of Transactions hereunder is a financial accommodation and if Merchant becomes a debtor in any Bankruptcy or similar proceeding, this Agreement may not be assumed or enforced by any other person and Bank will be excused from performance hereunder.
MISCELLANEOUS
5.1. Account Monitoring: Merchant acknowledges that Bank will monitor Merchant’s Transaction activity. In addition to Bank’s right to fund a Reserve Account as set forth in Section 3.05, Bank may upon reasonable grounds suspend disbursement of Merchant’s funds for any reasonable period of time required to investigate suspicious or unusual Transaction activity. Bank will make good faith efforts to notify Merchant promptly following such suspension. Bank is not liable to Merchant for any loss, either direct or indirect, which Merchant may attribute to any suspension of funds disbursement.
Forms: Merchant will use only the forms or modes of transmission of Transaction Records and Credit Vouchers that are provided or approved in advance by Bank, and Merchant may not use such forms other than in connection with Transactions.
Indemnification: Merchant will defend, indemnify and hold Bank, its Affiliates and each of its/their officers, directors, members, shareholders, partners, employees, agents, subcontractors and representatives (collectively, the “Indemnified Parties”) harmless from and against any and all fines, penalties, claims, damages, expenses, judgments, liability assessments, costs, liabilities or fees of any nature whatsoever, including attorneys’ fees and costs (collectively, “Damages”), asserted against or incurred by any of the Indemnified Parties arising out of, relating to or resulting from, either directly or indirectly: (a) a breach of the security of the system safeguarding Cardholder Information resulting in unauthorized access to Cardholder Information; (b) Merchant’s Transactions, performance of its obligations under this Agreement, or use of the Services (including, without limitation, for refunds, Chargebacks, or liability assessments imposed by the Card Brands); (c) breach of this Agreement, including, but not limited to, the data security provisions, by Merchant, or any service provider, subcontractor or agent of Merchant;; (d) any violation of Law or Rules by Merchant; (e) the state or
configuration of Merchant’s equipment, including, without limitation, Merchant’s failure to maintain all point of sale equipment, download equipment, and point of sale software updates or to use EMV enabled equipment supported by Bank; (f) Merchant’s use of third-party services or service providers, including gateways, value added resellers, and independent software vendors; (g) any proceeding, litigation, or arbitration commenced by a third party arising out of or relating to any actual or alleged act or omission by Merchant; (h) any demands, investigations, or subpoenas (or similar process) received related to Merchant or its Transactions, whether initiated by regulators, law enforcement, civil litigants, or lienholders under the Uniform Commercial Code; and (i) all third-party claims arising from the foregoing.
Notwithstanding the preceding, Merchant is not liable to Bank to the extent Damages are caused by, related to or arise out of Bank’s gross negligence or willful misconduct. Bank shall have the right to select and retain counsel of its choosing to represent it in connection with any of the foregoing events, and nothing in this Section shall entitle Merchant to select counsel or assume the defense of any such matter.
Records: In addition to any records Merchant routinely furnishes to Bank under this Agreement, Merchant will preserve Transaction Records and Credit Vouchers and any written authorization of the Cardholder for 6 years, or as required by law or legal subpoena, whichever is longer.
5.5. Request for Copies: Immediately after Merchant receives the request by Bank, Merchant will provide to Bank either the original or a legible copy (in a size comparable to the actual Transaction Record) of the paper Transaction Record, digital Transaction Record, and any other documentary evidence available to Merchant that Bank reasonably requests to meet Bank’s obligations under Law (including its obligations under the Fair Credit Billing Act) or otherwise to respond to questions concerning Cardholder accounts.
Exclusivity: Merchant agrees that during the Term, Merchant will use Bank as its exclusive provider of all Services.
Fees and Charges: Merchant will pay to Bank the fees and charges set forth on the Merchant Application, this Agreement or any Addenda thereto, as same may be amended from time to time pursuant to this Agreement, including any additional charges applied to transactions that fail to meet Card Brand requirements for the lowest interchange levels. Merchant is responsible for payment of refunds, Chargebacks, fees, indemnified losses, and other amounts payable to Bank or the Card Brands related to or associated with its use of the Services, its Transactions, and/or its processing activity. Bank at any time, with or without notice, may collect such amounts due pursuant to this Agreement by demanding immediate payment, by debiting the Operating Account or the Reserve Account, or by subtracting such amounts from future settlements. Fees appearing on the Merchant Application are based upon assumptions regarding Merchant’s anticipated volume, average transaction size, and method of doing business. If these assumptions prove materially inaccurate, may adjust Merchant’s fees without prior notice. Any such adjustments shall be in addition to, and not in lieu of, any other remedies available to Bank hereunder.
Security Interest: To secure payment of Merchant’s obligations under this Agreement, Merchant grants to Bank a security interest in all now existing or hereafter acquired: (a) Transactions, Transaction Records, Credit Vouchers and other items submitted to Bank for processing by or for Merchant; (b) accounts receivable and payment rights relating to or arising from this Agreement, including all amounts due Merchant (including any rights to receive credits or payments hereunder) or funds withheld by Bank for security monitoring; (c) accounts maintained with Bank or any institution other than Bank, including without limitation the Operating Account and the Reserve Account, in the name of or for the benefit of, Merchant or any Guarantor of Merchant’s obligations under this Agreement; and (d) proceeds of the foregoing. With respect to any security interests granted herein, Bank will have all rights afforded under the Uniform Commercial Code, as the same may, from time to time, be in effect in the State of California; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the security interests granted herein is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of California, then Bank will have all rights afforded under the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions relating to such attachment, perfection or priority of the security interests, as well as any other applicable law. Bank may fully or partially prohibit withdrawal by Merchant of funds from Merchant’s Operating Account with Bank or financial institutions other than Bank,
pending Bank’s determination from time to time to exercise its rights as a secured party
against such accounts in partial or full payment of Merchant’s obligations to Bank. Merchant will execute any documents and take any actions required to comply with and perfect any
security interest under this paragraph, at Merchant’s cost. Merchant represents and warrants that no other party has a security interest or lien in any of the collateral pledged above, and Merchant will obtain Bank’s written consent before it grants a lien or security interest in that pledged collateral to any other person. Bank prohibits Merchant from selling or assigning future Transaction receivables to any third party without Bank’s prior written consent.
Right of Set Off: If Bank reasonably determines that Merchant has breached any obligation under this Agreement, or that proceeds of Merchant’s future Transactions are unlikely to cover anticipated Chargebacks, credits, fees and adjustments, as reasonably
determined by Bank (whether because this Agreement has been terminated or for any other reason), Bank may setoff or otherwise exercise its security interest without notice or demand by immediately withdrawing from or freezing any account or otherwise exercising its rights under this Agreement or those rights available under the Rules, applicable Laws, or in equity.
5.10. Modifications to Agreement: From time-to-time Bank may amend any provision or provisions of this Agreement, including, without limitation, those relating to the discount rate or to other fees and charges payable by Merchant by providing written notice to Merchant of the amendment at least 30 days prior to the effective date of the amendment, and the amendment will become effective unless Bank receives Merchant’s written notice of termination of this Agreement before such effective date. If Merchant continues to submit Transaction Records to Bank or otherwise continues to process Transactions with Bank after such 30-day period (even if notice of objection was provided to Bank), then Merchant shall be deemed to have accepted and agreed to such amendment. In addition, Merchant acknowledges and agrees that this Agreement is subject to amendment by Bank to conform to the Rules and Law and that amendments required due to changes in either the Rules, Law or judicial decision may become effective on such shorter period of time as Bank may specify, if necessary, to comply with the applicable Rule, Law, or decision. As a matter of clarification, Merchant may not terminate this Agreement if Bank amends the Agreement as necessary to comply with applicable Rules, Law, or a judicial decision.
Warranty Disclaimer: BANK MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE SERVICES OR THE USE, OPERATION OR PERFORMANCE OR NON- PERFORMANCE OF SOFTWARE OR SYSTEMS UTILIZED FOR THIS AGREEMENT, WHETHER EXPRESS OR IMPLIED, AND BANK EXPRESSLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, NON-INFRINGEMENT, AND ANY WARRANTY ARISING BY STATUTE, OPERATION OF LAW, COURSE OF DEALING, PERFORMANCE, USAGE, OR TRADE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BANK DOES NOT GUARANTEE OR WARRANT THAT (A) THE SERVICES OR SOFTWARE WILL BE UNINTERRUPTED OR ERROR-FREE; (B) THAT ANY SOFTWARE WILL BE VIRUS-, DEFECT-, OR ERROR-FREE; OR (C) THAT DATA, REPORTS, OR ANALYSES WILL BE FREE FROM ALL BUGS AND ERRORS.
5.12. Limitation of Liability: UNDER NO CIRCUMSTANCES SHALL THE AGGREGATE FINANCIAL RESPONSIBILITY OF BANK OR ITS AFFILIATES FOR ANY BREACH, FAILURE OF PERFORMANCE, ACT, OR OMISSION UNDER THIS AGREEMENT EXCEED THE FEES OR CHARGES PAID TO BANK BY MERCHANT FOR THE TRANSACTION OR ACTIVITY THAT IS OR WAS THE SUBJECT OF THE ALLEGED BREACH, FAILURE OF PERFORMANCE, ACT, OR OMISSION. IN NO EVENT WILL BANK, ITS AFFILIATES OR ITS/THEIR AGENTS, OFFICERS, DIRECTORS, OR EMPLOYEES BE LIABLE TO MERCHANT FOR ANY INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE, SPECIAL, OR CONSEQUENTIAL DAMAGES WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF REVENUE, OR CLAIMS BY MERCHANT OR ANY THIRD PARTY RELATIVE TO THE TRANSACTIONS OR ACTIVITIES HEREUNDER, WHETHER OR NOT SUCH DAMAGES WERE FORESEEABLE OR SUCH PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. WITHOUT LIMITING THE FOREGOING, BANK SHALL NOT BE LIABLE FOR (A) THE DECLINE OF A TRANSACTION, EVEN IF SUCH DECLINE WAS WRONGFUL; (B) ANY LOSS CAUSED BY A TRANSACTION DOWNGRADE, REGARDLESS OF THE CAUSE; OR (C) THE FAILURE TO PROCESS, AUTHORIZE, OR CAPTURE A TRANSACTION. MERCHANT WAIVES ALL CLAIMS AGAINST BANK AND ITS AFFILIATES FOR ANY LOSS, CLAIM, DEMAND, PENALTY, ACTION, DELAY, COST, OR
EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES) OF ANY KIND UNLESS MERCHANT PROVIDES WRITTEN NOTICE TO BANK OF THE OCCURRENCE THAT GAVE RISE TO THE ALLEGED LIABILITY WITHIN 30 DAYS AFTER MERCHANT KNEW OR SHOULD HAVE KNOWN OF THE OCCURRENCE. MERCHANT ACKNOWLEDGES THAT THE FEES FOR THE SERVICES PROVIDED TO MERCHANT BY BANK ARE VERY SMALL IN RELATION TO THE FUNDS ADVANCED TO MERCHANT FOR TRANSACTIONS AND CONSEQUENTLY BANK’S WILLINGNESS TO PROVIDE THESE SERVICES IS BASED ON THE LIABILITY LIMITATIONS CONTAINED IN THIS AGREEMENT. THEREFORE, IN ADDITION TO GREATER LIMITATIONS ON BANK’S LIABILITY THAT MAY BE PROVIDED ELSEWHERE (INCLUDING THE PER TRANSACTION RECORD LIMITATION ABOVE), ANY LIABILITY OF BANK OR ANY OF ITS AFFILIATES UNDER THIS AGREEMENT, WHETHER TO MERCHANT OR ANY OTHER PARTY, WHATEVER THE BASIS OF THE LIABILITY, WILL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT EQUAL TO THE LESSER OF (A) THE FEES PAID BY MERCHANT TO BANK DURING THE THREE (3) MONTH PERIOD PRECEDING THE EVENT THAT GAVE RISE TO THE CLAIM OF LIABILITY, EXCLUSIVE OF FEES AND VARIABLE COSTS INCURRED BY BANK TO PROCESS TRANSACTIONS, SUCH AS INTERCHANGE COSTS, ASSESSMENTS AND FEES IMPOSED BY A THIRD PARTY; OR (B) $25,000.
Waiver: Bank failure to enforce one or more of the provisions of this Agreement will not constitute a waiver of the right to enforce the same or other provision in the future.
Notices: Notices and communications given under this Agreement to Bank must be in writing and given by (a) deposit in the United States mail, addressed to the Bank at the address designated in the Merchant Agreement, postage prepaid and registered or certified with return receipt requested, or (b) delivery in person, or by courier service, providing evidence of delivery and will be deemed effective upon receipt. Bank may provide Merchant with effective notice under this Agreement, including, without limitation, of any amendment to this Agreement or to the fees, by any of the following means: (a) via mail at the address designated in the Merchant Application (or such other address as Merchant may provide), including by statement messages
appearing on any Merchant Statement; (b) through electronically available Merchant
Statement(s), or through any other means of electronic communication maintained by Bank which Merchant may access; or (c) electronically, via any email address designated by
Merchant. Merchant expressly consents to receive documents and notices electronically and agrees to maintain access to the internet for so long as this Agreement is in effect.
Choice of Law; Jurisdiction; Waiver of Jury Trial: The parties recognize that one or more Processor(s) will facilitate the processing of Transactions under this Agreement and are likely to have superior access to documents and information regarding the Transactions
processed hereunder. The parties also recognize that the Processor(s) are likely to be located in, or have office locations in, the State of Georgia. Furthermore, the parties recognize that, given the concentration of the payments industry in the State of Georgia, Georgia law has developed voluminous case law regarding disputes arising out of and related to the payments industry.
Consequently, the parties have agreed that any Disputes arising out of or relating to this
Agreement shall be governed by the laws of the State of Georgia and the federal laws applicable therein, all without regard to choice-of-law rules that might cause the substantive law of
another state or jurisdiction to apply. TO THE EXTENT PERMITTED BY APPLICABLE LAW, MERCHANT AND BANK WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDINGS REGARDING ANY LITIGATION RELATED TO THIS AGREEMENT AND EACH AGREE THAT ANY SUCH ACTIONS OR PROCEEDINGS WILL BE TRIED BY A JUDGE WITHOUT A JURY.
Arbitration: ANY DISPUTE OR CLAIM ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT OR THE RELATIONSHIPS WHICH RESULT FROM THIS AGREEMENT SHALL BE RESOLVED BY BINDING ARBITRATION, RATHER THAN IN COURT.
ARBITRATION DOES NOT PROCEED BEFORE A JURY AND MAY INVOLVE MORE LIMITED DISCOVERY THAN A COURT PROCEEDING. ANY ARBITRATION UNDER THIS AGREEMENT WILL ONLY BE ON AN INDIVIDUAL BASIS. CLASS ARBITRATIONS, CLASS ACTIONS, PRIVATE ATTORNEY GENERAL ACTIONS, AND CONSOLIDATION WITH OTHER ARBITRATIONS ARE NOT PERMITTED.
Notwithstanding the foregoing, nothing in this Section prohibits a party from applying to a court of competent jurisdiction for a temporary restraining order, preliminary injunction, or other
preliminary equitable relief. The Federal Arbitration Act (9 U.S.C. § 1 et seq.) governs the
interpretation and enforcement of the arbitration provisions of this Section. Arbitration will be administered by JAMS (www.jamsadr.com). For claims greater than $250,000, the JAMS Comprehensive Arbitration Rules and Procedures in effect at the time the arbitration is commenced will apply. For claims equal to or less than $250,000, the JAMS Streamlined
Arbitration Rules and Procedures in effect at the time the arbitration is commenced will apply. Unless the arbitrator(s) determine that justice or fairness require otherwise: (i) any arbitration will proceed in State of Georgia (although, for the convenience of the parties, any party or its counsel may participate telephonically or by video conference, and the hearing time(s) may be adjusted to accommodate the schedules of the parties and the witnesses); (ii) the arbitrator(s) will oversee limited discovery, taking into account the amount in controversy and the parties’ desire to keep proceedings cost-effective and efficient; (iii) absent compelling circumstances,
each party shall be entitled to take no more than two depositions, although one such deposition may proceed in accordance with Federal Rule of Civil Procedure 30(b)(6), and each party shall
be limited to ten (10) requests for production and ten (10) interrogatories; and (iv) the
claimant(s) and respondent(s) will bear the cost of arbitration, including the cost of any filing
fee, equally, subject to the discretion of the arbitrator(s) to alternatively allocate costs pursuant to the applicable rules in any final award; provided, however, that for claims equal to or less than $25,000, Company shall not be responsible to pay any case initiation or similar fee greater than that of the filing fee in the Fulton County, Georgia at the time arbitration is filed unless the arbitrator(s) determine that such claims are frivolous. The arbitrator(s) shall have no authority to award damages that are inconsistent with the limitations and exclusions set forth in this Agreement or to award sanctions or punitive damages. Any decision rendered in such
arbitration proceedings shall be final and binding on each of the parties to the arbitration and judgment may be entered thereon in any court of competent jurisdiction. The parties will maintain the confidential nature of the arbitration proceeding except as may be necessary to enforce any award or to comply with Law. If any part of this Section 5.16 is found invalid or unenforceable or to render this Section 5.16 invalid or unenforceable, the other parts of this Section 5.16 shall still apply with such term or terms stricken. For any dispute not subject to compulsory arbitration hereunder (e.g., motions seeking preliminary injunctive relief), the
parties irrevocably submit themselves to the exclusive jurisdiction of the courts located in or having jurisdiction over Fulton County, Georgia.
Entire Agreement; Assignability: This Agreement expresses the entire understanding of the parties with respect to the subject matter hereof. This Agreement may be assigned by Bank without Merchant’s consent. This Agreement may not be assigned, directly or by operation of law by Merchant, without Bank’s prior written consent. This Agreement will be binding upon and inure to the benefit of the parties’ respective heirs, personal representatives, successors, and assigns.
Operating Account: Merchant will at all times maintain an Operating Account at a Bank that is a member of the Federal Reserve ACH system. Merchant authorizes Bank to initiate debit and credit entries to the Operating Account through the ACH settlement process and agrees that Bank may debit the Operating Account for any amounts owed hereunder or to which Bank may otherwise be entitled for any reason. Such authorization shall remain in place until the later of termination of this Agreement or Merchant’s satisfaction of all obligations to Bank hereunder. All credits for collected funds and debits for fees, payments and Chargebacks and other amounts for which Merchant is liable under the terms of this Agreement will be made to the Operating Account. During the term of this Agreement and for a period of one year after the termination of this Agreement, Merchant may not close or change the Operating Account without prior written approval by Bank, which approval may not be unreasonably withheld. Merchant will be solely liable for all fees and costs associated with the Operating Account and for all overdrafts. Merchant will maintain sufficient funds in the Operating Account to accommodate all Transactions contemplated by this Agreement and all other fees, charges, credits, or other payments or amounts due under this Agreement.
Credit and Financial Inquiries; Additional Locations; Inspections: Bank may make, at any time, any credit inquires which it may consider necessary to accept or review acceptance of
this Agreement or investigate Merchant’s deposit or Card acceptance activities subsequent to acceptance of this Agreement. Such inquiries may include, but are not limited to, a credit and/or criminal check of Merchant and business including its proprietor, partners, principals, owners or shareholders or officers. Upon Bank’s request, Merchant will provide the written consent of any person for which an inquiry has been or is to be made if such person has not executed this Agreement and will provide any financial statements, income tax and business tax returns and other financial information as Bank may consider necessary to perform initial or
periodic reviews of Merchant’s financial stability and business practices. Merchant may accept Cards only at locations approved by Bank. Additional locations may be added, subject to Bank’s prior consent. Bank or Merchant may remove locations by providing notice as provided
herein. Merchant will permit Bank, at any time and from time to time, to inspect locations to confirm that Merchant has or is adhering to the terms of this Agreement and is maintaining the proper facilities, equipment, inventory, records, and license or permits (where necessary) to conduct its business. However, nothing in this paragraph may be deemed to waive Merchant’s obligation to comply in all respects with the terms of this Agreement or the Rules. Bank, its internal and external auditors, and its regulators may audit compliance with this Agreement, compliance with Laws and Rules, including, but not limited to, relating to Card acceptance and Transaction processing, data security provisions and Card Brand compliance. Merchant will
make available its records maintained and produced under this Agreement, and Merchant’s facilities will be made accessible, upon notice during normal business hours for examination and audit and shall cooperate with such audits or examinations. Nothing in this section may be construed to require Merchant to give access to its facilities, personnel or records in a manner that unreasonably interferes with its business operations. Each party will bear its own expenses of any audit.
Force Majeure: The parties will be released from liability hereunder if they fail to perform any obligation where the failure occurs by reason of any act of God, fire, flood, storm, earthquake, tidal wave, communications failure, sabotage, war, military operation, terrorism, national emergency, mechanical or electronic breakdown, civil commotion or the order, requisition, request or recommendation of any governmental authority, or either party’s compliance therewith, or governmental regulation, or priority, or any other similar cause
beyond either party’s reasonable control.
Services: Subject to the Rules, Services may be performed by Bank, its Affiliates, its agents or other third parties Bank may designate from time to time in connection with this Agreement. Information related to Merchant’s Transaction activity or any credit or financial information of Merchant may be disclosed to any such third-party servicers or any referral Bank partner.
Third Party Beneficiary: Bank’s respective Affiliates and any Persons Bank uses in providing the Services are third party beneficiaries of this Agreement and each of them may enforce its provisions as it was a party hereto. Except as expressly provided in this Agreement, nothing in this Agreement is intended to confer upon any Person any rights or remedies, and the parties do not intend for any Persons to be third-party beneficiaries of this Agreement.
5.23. Severability; Conflict with Rules: If any provision in this Agreement is for any reason held to be invalid or unenforceable, no other provision shall be affected thereby, and this Agreement shall be construed as if the invalid or unenforceable provision had never been a part of it. In the event of a conflict between this Agreement and the Rules, the Rules shall govern and control.
IRS Reporting Information: Pursuant to Section 6050W of the Internal Revenue Code, merchant acquiring entities such as Bank and third-party settlement organizations are required to file an information return reflecting all payment card transactions and third-party network transactions occurring in a calendar year. This requirement applies to returns for all calendar years after December 31, 2010 and Merchant will receive a form 1099-K reporting Merchant’s gross transaction amounts for each calendar year. In addition, amounts payable under Section 6050W are subject to backup withholding requirements. Merchant acquirers such as Bank, either itself or through third parties, are required to perform backup withholding by deducting and withholding income tax from reportable transactions if (a) the payee fails to provide the
payee’s taxpayer identification number (TIN) to the merchant acquirer; or (b) if the IRS notifies the merchant acquirer that the TIN (when matched with the name) provided by the payee is incorrect. Accordingly, to avoid backup withholding, it is very important that Merchant provides Bank with the correct name and TIN that Merchant uses when filing its income tax return that includes the transactions for Merchant’s business. In addition to the fees set forth on the Merchant Application, if Merchant fails to comply with the obligations set forth in this section, Bank may charge Merchant additional amounts determined by Bank and may pass through any additional fines, costs or expenses incurred by Bank to Merchant.
Confidentiality: Merchant shall protect all information or other items proprietary to Bank that Merchant obtains knowledge of or access to as a result of Bank’s provision of the services pursuant to this Agreement (collectively, “Confidential Information”) from unauthorized disclosure, publication, or dissemination with the same standard of care and discretion Merchant uses to protect similar confidential information of Merchant’s own, but in no event less than reasonable care. Furthermore, Merchant shall not use, reproduce, distribute, disclose, or otherwise disseminate Bank Confidential Information, except in
connection with the performance of Merchant’s obligations under this Agreement. The obligations of non-disclosure provided hereunder shall continue during the Term and for a period of five years thereafter.
E-Sign Consent Agreement: By accessing and using the Services, Merchant hereby consents and agrees that:
Bank can provide disclosures required by Law and other information about Merchant’s
legal rights and duties to Merchant electronically.
Where required or requested, Merchant’s electronic signature (via “click-through” or other method) on agreements and documents relating to use of the Services has the same effect as if Merchant signed them in ink.
(c) Bank can send all communications, billing statements, amendments to the Services or this Agreement, notices, and other disclosures or information regarding the Services or Merchant’s access to and use of the Services (collectively, “Disclosures”) to Merchant electronically (1) via e-mail, (2) by access to a website that Bank designates in an e-mail notice that the Bank sends to Merchant at the time the information is available, or (3) to the extent permissible by Law, by access to a website that Bank will generally designate in advance for such purpose.
If Merchant wants a paper copy, Merchant can print a copy of the Disclosure or download
the information for Merchant’s records.
This consent applies to all future Disclosures sent to Merchant in connection with the Services or this Agreement.
Legal Effect. By consent, Merchant agrees that electronic Disclosures have the same meaning and effect as if Bank provided paper Disclosures to Merchant. When Bank sends Merchant an email or other electronic notification alerting Merchant that the Disclosure is available electronically and makes it available online, that shall have the same meaning and effect as if Bank provided a paper Disclosure to Merchant, whether or not Merchant chooses to view or print or download the Disclosure.
SPECIAL PROVISIONS FOR AMERICAN EXPRESS
The provisions of this Section 6 apply to American Express Card acceptance (“Program”)
(capitalized terms below not defined elsewhere in this Agreement shall have the meanings assigned in the American Express Network Rules). With respect to participation in the Program, in the event of a conflict between the terms of this Section 6 and other terms of this Agreement, the terms below shall control with respect to American Express transactions only. Furthermore, subject to only American Express transactions, in the event of any conflict between any defined term in this Agreement and term defined by American Express, the term defined by American Express shall control. Merchant shall be bound by American Express Network Rules, including the Merchant Operating Guide, which may be amended from time to time and is incorporated herein by reference: https://icm.aexp-
static.com/content/dam/gms/en_us/optblue/us-mog.pdf.
This is a legally enforceable agreement for Merchant to comply with, and accept Cards in
accordance with, the terms of the Merchant Agreement and the American Express Merchant Operating Guide, as such terms may be amended from time to time.
Merchant Requirement: Merchant must comply with all Applicable Laws, Rules and regulations relating to the conduct of the Merchant’s business.
Transaction Data: Merchant authorizes Bank and/or its Affiliates to submit American Express Transactions to, and receive settlement on such Transactions from, American Express or Bank on behalf of Merchant.
6.3. Treatment of American Express Cardholder Information: . Merchant must ensure data quality and that Transaction Data and customer information are processed promptly, accurately, completely, and complies with the American Express Technical Specifications.
Privacy and Data Security: Merchant is responsible for being aware of and adhering to privacy and data protection laws and provide specific and adequate disclosures to Cardmembers of collection, use, and processing of personal data. Merchant must comply with the American Express Data Security Requirements (DSR) and Payment Card Industry Data Security Standard (PCI DSS). Merchant must report all instances of a Data Incident immediately to the Bank after discovery of the incident.
Disclosure and Use of Data Collected Under Agreement: Bank may collect and disclose to American Express Transaction Data, Merchant Data, and other information about Merchant. American Express may use such information to perform its responsibilities in connection with the Program, promote the American Express Network, perform analytics, and create reports, and for any other lawful business purposes, including commercial marketing communications purposes within the parameters of this Agreement, and important
transactional or relationship communications from American Express. American Express may the information obtained in the Merchant’s application at the time of setup to screen and / or monitor Merchant in connection with Card marketing and administrative purposes.
Marketing Message Opt-Out: Merchant may opt-out of receiving future commercial marketing communications from American Express by contacting Bank. Note that Merchant may continue to receive marketing communications while American Express updates its records to reflect this choice. Opting out of commercial marketing communications will not preclude Merchant from receiving important transactional or relationship messages from American Express.
Conversion to American Express Direct Merchant: Merchant acknowledges that it may be converted from the Program to a direct relationship with American Express if and when its Transaction volumes exceed the eligibility thresholds for the Program (“High CV Merchant”). If this occurs, upon such conversion, (i) Merchant will be bound by American Express’ then- current Card Acceptance Agreement; and (ii) American Express will set pricing and other fees payable by Merchant for Card acceptance.
American Express as Third-Party Beneficiary: Notwithstanding anything in the Agreement to the contrary, American Express shall have third-party beneficiary rights, but not obligations, to the terms of this Agreement applicable to the Program to enforce such terms against Merchant.
American Express Opt-Out: Merchant may opt out of accepting American Express Cards at any time without directly or indirectly affecting its rights to accept Other Payment Products.
6.10. Refund Policies: Merchant’s refund policies for purchases on the Card must be at least as favorable as its refund policy for purchase on any Other Payment Products, and the refund policy must be disclosed to Cardmembers at the time of purchase and in compliance with Law. Merchant may not bill or attempt to collect from any Cardmember for any American Express purchase or payment on the American Express Card unless a Chargeback has been exercised, the Merchant has fully paid for such Charge, and it otherwise has the right to do so.
Third Party Assignment: Merchant shall not assign to any third party any
payments due to it under this Agreement, and all indebtedness arising from Charges will be for bona fide sales of goods and services (or both) at its Establishments and free of liens, claims, and encumbrances other than ordinary sales taxes; provided, however, that the Merchant may sell and assign future Transaction receivables to Bank, its affiliated entities and/or any other cash advance funding source that partners with Bank or its affiliated entities, without consent of American Express.
Termination: American Express or Bank has the right to terminate a Merchant’s right to accept Cards if it breaches any of the provisions in the American Express Merchant Operating Guide or this Agreement. In addition, the Bank has the right to immediately terminate a
Merchant for cause or fraudulent or other activity, or upon American Express’ request.
Merchant must cease all use of, and remove American Express Licensed Marks from its website and wherever else they are displayed upon termination of the Agreement or a Merchant's
participation in the Program.