What is a ‘contract’
The merchant agreement is a contract that governs the relationship between a business and a merchant acquiring Bank. Merchant contract documents a full range of merchant acquiring services the Bank provides. Merchant acquiring banking relationships is necessary for any trader to choose to offer electronic payments with merchant acquiring banks are responsible for facilitating all aspects of the process electronic transactions for the merchant.
Breaking the ‘contract’
Merchant agreements detail the full range of merchant acquiring services the Bank provides to its customers. Typically, these services include banking and transaction processing. Some merchant banks may also serve as a credit-card provider for both open loop and closed merchant card loop.
The Acquiring Bank Relationship
The acquiring Bank relationships allow merchants to authorize electronic payment transactions. If the buyer chooses not to allow electronic payments and accepts only cash they usually setup a standard Bank account, which will have its own requirements and provisions of the contract.
Acquiring banks to help merchants process electronic transactions. This includes obtaining information from a payment services gateway provider, communicating with cards via the Internet the buyer, having received permission, and communication and settlement of the transaction to the seller. Throughout this process, acquirers may have certain technical characteristics that merchants must follow in order to use their services. One important feature is the use of network processing acquiring Bank. Most buyers will have relations with all on the market of processors to simplify operations, however, some may have only a limited relationship. Network processing acquirer will dictate the types of cards merchants can accept electronic payment transactions.
Fees are also a major aspect of trade agreements. Many traders pay a wide range of fee-for-service electronic payment processing. Payment will vary depending on the online and brick-and-mortar operations. Typically, the seller will be required to pay a comprehensive fee to the acquirer for each transaction, which covers not only the fees of the buyer and fees processors. Buyers usually charge a monthly fee for the settlement and maintenance of Bank accounts they provide to merchants.
Rules and requirements
Numerous rules and requirements can be integrated into the trade agreement, including the following:
- The seller must accept all valid cards issued by the payment network.
- The seller must place the logos of payment cards, which he accepts.
- Merchant may not require customers to pay a surcharge on transactions on payment cards, with the exception of some countries where this practice is allowed.
- The seller may set a minimum transaction amount on payment cards.
- The merchant cannot accept the card for illegal purchases, such as sale of alcohol or tobacco products to minors.
- The seller must charge sales tax on the payment card, along with the amount of the purchase.
- Merchant can authorize the transaction include the expected tip to transactions where a tip can be used, for example, restaurant purchases and travel by taxi.
- Merchant may return a transaction of a payment card in cash; they must issue a refund to the payment card.
- The seller shall not print the full card account number or expiration date printed on the receipt.
- The seller is obliged to protect personal data of card holder.
- The seller is obliged to train employees to recognize potentially fraudulent transactions and cards.
- The seller should provide its customers with a clear return and refund policy.