Merchant Payment Services Agreements: Key Provisions for Retailers, Banks, and Payment Processors

This CLE course will provide counsel with the tools to understand and negotiate point-of-sale merchant services agreements. The panel will break down the many layers in accepting and processing card payments and other payment services such as buy now pay later, bank financing at the POS and others. This course also will cover issues unique to e-commerce marketplaces. For each service, the panel will provide an understanding of the roles and legal responsibilities of each party on issues relating to regulatory compliance, card network compliance, data security, confidentiality, exclusivity, indemnification, fee structures, discount rates, interchange, and reserves.

Engaging a service provider to provide point-of-sale payment services for a retail operation can be a daunting task, especially without an adequate understanding of the complex roles and relationships of those involved in the payments chain.

The merchant is typically presented with a form payment services agreement from the provider. Still, merchant’s counsel should work to obtain a full understanding of how the service will work, what implementation obligations the merchant will have, the full range of applicable fees and costs, and to review and negotiate key provisions relating to compliance with industry standards, data security, confidentiality, use of third parties, reserves, and more. Additional standards and guidelines are often incorporated by reference and should be part of the review.

Among other things, data security is a fundamental issue in these agreements, and a merchant's obligations under PCI Data Security Standards or otherwise may vary depending on the size of its business and the payment types accepted. Contractual liabilities that flow from a data breach often exceed all other financial liabilities, including the cost to defend litigation or regulatory investigation.

Listen as our authoritative panel discusses key negotiation points in these agreements, provisions that may be non-negotiable due to regulatory or network requirements, and the negotiating points that may mitigate the merchant’s potential liability.