MERCHANT SERVICES TERMS AND CONDITIONS

Last updated: January 9, 2018

These merchant services terms and conditions (“Terms and Conditions”) are for merchant card payment processing services among the merchant (“Merchant”) that signed the merchant services application (“Merchant Application”), Wells Fargo Bank, N.A. (“Member Bank”), and ProPay, Inc. (“ProPay”). The Merchant Application and the Terms and Conditions are part of the “Merchant Agreement” as defined below. ProPay and Member Bank are hereinafter collectively referred to as the “Bank”. Subject to the requirements of the rules of the various card brands, ProPay and Member Bank reserve the right to allocate Bank’s duties and obligations amongst themselves as they agree appropriate in their sole discretion, and Member Bank or ProPay may jointly or individually assert or exercise any rights or remedies provided to Bank hereunder. For clarity, any rights, remedies, benefits, limitations of liability and disclaimers of, or other provisions applicable to, “Bank” apply to Member Bank and ProPay individually. If Merchant wishes to address any act or omission by, or make or bring any claim or action against, Bank relating to this Merchant Agreement, it shall first discuss such issue with ProPay prior to making or bringing any claim or action against Member Bank (in which case ProPay shall address the issue as agreed with Member Bank).

Member Bank, as a member of Visa U.S.A. Inc. (“Visa”) and Mastercard International Incorporated (“Mastercard”), provides transaction processing and other services and products in connection with financial services provided by Visa and Mastercard. ProPay provides transaction processing and other services and products in connection with financial services provided by American Express Travel Related Services Company, Inc. (“American Express”), and DFS Services LLC (“Discover”). Visa, Mastercard, American Express, and Discover are collectively defined as the “Card Brands” and their cards are each a “Card”. If elected by Merchant, ProPay will settle American Express and Discover transactions. Member Bank does not sponsor ProPay into the American Express network and Discover network, is not providing or agreeing to provide Merchant any services hereunder with respect to American Express and Discover transactions, and has no responsibility or liability to Merchant for American Express and Discover transactions.  

ProPay, as an agent of Member Bank, provides payment card processing services. Merchant is engaged in the business of selling goods and services, and desires that Bank provide the services described in the Merchant Agreement (the “Merchant Services”) on the terms and conditions of this Merchant Agreement.

1.      MERCHANT’S APPLICATION AND INFORMATION. By completing the Merchant Application, Merchant applies for the Merchant Services. In their sole and absolute discretion, ProPay and/or Member Bank may accept or reject Merchant’s Application.  Merchant may present Transactions to Bank only for the activities and in the volumes described on the Merchant Application. “Transaction” means a purchase by Card of goods or services from Merchant or a refund by Merchant to a Card done through Merchant Services. The earlier date of the presentation of the first Transaction, including any test Transaction, by Merchant to Bank or the date Bank approves the Merchant Application signifies the effective date of the Merchant Agreement (“Effective Date”). By either Merchant’s signature on the Merchant Application or Merchant’s processing a Transaction (including a test Transaction) with Bank, Merchant affirmatively accepts and agrees to be bound by the Merchant Agreement. If Merchant fails to submit Card Transactions for processing within 120 days after the Effective Date for any reason other than ProPay’s failure to perform its obligations under the Merchant Agreement, then Merchant shall pay to ProPay as damages (and not as a penalty) $100 for each 30 day period in which Merchant processes no Transactions. Damages shall begin accruing as of the 121st day following the Effective Date and shall stop accruing as soon as Merchant begins processing Transactions under this Merchant Agreement.

2.      MERCHANT AGREEMENT; INCORPORATION OF ADDITIONAL TERMS AND PROVISIONS.

2.1.  The exhibits to these Terms and Conditions, as amended from time to time, are part of these Terms and Conditions, as are the Merchant Application, fee schedule, and the Card Brand Rules, and are hereinafter individually and collectively referred to as the “Merchant Agreement.” “Card Brand Rules” means the by-laws, operating regulations, rules, policies, and procedures of the Card Brands, as in effect from time to time. Without limiting the foregoing, this Agreement includes the provisions required by: (a) the Visa International Operating Regulations relating to the Merchant Chargeback Monitoring Program, the Merchant Agreement Requirements, and Merchant Card Acceptance (the “Visa Regulations”); and (b) section 5.1 and sections 5.6 through 5.12 of the Mastercard Rules (the “Mastercard Rules”); and (c) chapter 4, “transaction processing”, chapter 11, “chargebacks and inquiries,” and chapter 12, “specific industries” of the American Express Merchant Operating Guide, and Exhibit C “American Express Card Acceptance”. Copies of the Visa Regulations (http://corporate.visa.com/about-visa/our-business/operating-regulations.shtml) and the Mastercard Rules (http://www.Mastercard.com/us/merchant/pdf/BM-Entire_Manual_public.pdf) are available for review online. The American Express Merchant Operating Guide, which is a summary of the above-referenced American Express regulations, is available at www.americanexpress.com/merchantopguide. Merchant shall periodically review the contents of the Card Brand Rules to ensure it remains in compliance with them.

2.2.         The following documents (as found at https://www.propay.com/us/legal, as the same may be amended from time to time by ProPay with or without prior notice to Merchant) are incorporated into this Merchant Agreement: (a) the Privacy Policy; (b) the Terms of Use; (c) the Electronic Communication Agreement; (d) the Electronic Funds Transfer Agreement; and (e) the ProPay High Risk Acceptable Use Policy. Violation of any of the foregoing may result in any one or more of the following: (i) refusal of an authorization to process Transactions; (ii) suspension of the Merchant Services; and/or (iii) immediate termination of this Merchant Agreement.

3.      PROCEDURES FOR CARD TRANSACTIONS.

3.1.  In accepting Cards for the purchase of Merchant’s goods or services, Merchant shall comply with the requirements of the Merchant Agreement, including but not limited to the Card Brand Rules, as the same are revised from time to time.

3.2.  Submission of Valid Transactions.

(a)    Merchant will submit to Bank a Transaction only if the Transaction is made or approved by the cardholder who is issued the Card used for the Transaction. Merchant will not submit directly or indirectly: (i) any Transaction that Merchant knows or should have known to be fraudulent or not authorized by the cardholder; (ii) any Transaction that results from a transaction outside of Merchant’s normal course of business, as described on the Merchant Application; or (iii) any Transaction using a Card issued to Merchant or Merchant’s business owners, family members, or principals.

(b)    If at any time the volume of Transactions substantially exceeds or decreases from the projected annual volume stated on the Merchant Application, or if at any time Bank suspects fraud, money laundering or violations of the Card Brand Rules, Bank may, in its sole and absolute discretion and in addition to other remedies that the Bank may have: (i) refuse to process the excessive or suspect Transactions; (ii) process the Transactions and retain the funds received from processing until such time as the excess or suspect Transactions are found to be valid or invalid and processed in accordance with the Card Brand Rules; (iii) suspend processing and/or terminate the Agreement; or (iv) amend the Merchant Agreement to protect the interests of Bank.

3.3.  Payments to Merchant for Valid Transactions.

(a)    Bank will provide provisional credit to Merchant for each undisputed and valid Transaction which Merchant submits to Bank by crediting Merchant’s ProPay Account, provided Bank has received settlement for the valid Transaction through the interchange procedures specified by the relevant Card Brand. Bank is not obligated to provide provisional credit to Merchant for Transactions submitted that are not valid Transactions, and may suspend or discontinue any provisional credit in Member Bank’s and/or ProPay’s sole and absolute discretion, including for any reason that would justify termination of the Merchant Agreement. Each provisional credit from Bank to Merchant will be subject to adjustment, including revocation, upon Bank’s further review and verification. Provisional credit to Merchant for a Transaction disputed by a cardholder for any reason is not final.

(b)    Member Bank is responsible for providing settlement funds to Merchant, and ProPay shall not have access to or hold settlement funds. Member Bank deposits Transaction proceeds into a non-interest-bearing, aggregated account at Member Bank in the name of Member Bank for the benefit of all ProPay’s merchant customers. The subaccount shown in ProPay’s software for tracking Merchant’s funds in the aggregated account is Merchant’s “ProPay Account”. Merchant’s ProPay Account is not an actual account at Member Bank. Funds will remain in the Merchant’s ProPay Account until: (i) such funds are released by Merchant at its discretion, as evidenced on ProPay's website; or (ii) Merchant informs Bank to release such funds to the bank account designated by Merchant in accordance with the Electronic Funds Transfer (“Designated Account”).

(c)    Merchant may utilize multiple ProPay Accounts to allow for easier reporting of Transactions. Such additional ProPay Accounts require approval by ProPay and are subject to the terms of this Merchant Agreement. Merchant is responsible for any additional fees or costs associated with having multiple ProPay Accounts. These additional ProPay Accounts collectively count toward underwriting limits for Merchant, as such collective limits are established by Bank.

(d)    Merchant will promptly provide Bank with any information it requests in response to an inquiry from a Card Brand. A Card Brand may make an inquiry when it needs information about a disputed Transaction. In order to be able to respond to an inquiry, Merchant must maintain records and follow business practices that are in accordance with the Card Brand Rules.

(e)    Chargeback” means a Transaction returned by a Card issuer to Member Bank.. Merchant must not reenter or reprocess any Card Transaction that has been charged back. Instead Merchant must allow the Chargeback process to proceed to its conclusion. If Merchant disagrees with a Chargeback, Merchant may make a reversal request pursuant to applicable Card Brand Rules. Merchant acknowledges that regardless of its refund or return policy, Chargebacks will be handled in accordance with this Merchant Agreement and Card Brand Rules regarding returns and Chargebacks. Merchant is liable to Bank for the amount of all Chargebacks, Card Brand fines, and associated fees. Merchant authorizes Bank to deduct, recoup, or offset from incoming Transactions and to debit Merchant’s ProPay Account, the Merchant Reserve Account, and the Billing Reserve described below to recover any Chargeback. Bank may suspend accepting Transactions or releasing funds represented by Transactions to Merchant until Merchant reimburses Bank for all unpaid Chargebacks.

(f)     Merchant is liable to Bank for the amount by which credit Transactions processed on any day exceed valid Transactions submitted on that day. Bank may deduct the amount of any credit Transaction processed for Merchant in the same manner as it would a Chargeback.

3.4.  Restrictions. Merchant may not (i) indicate or imply that the Card Brands or Bank endorses any Merchant goods or services, (ii) refer to a Card Brand or Bank in stating eligibility for Merchant’s products, services or membership, or (iii) use any marks, symbols or logos owned by any Card Brand or Bank for any purpose other than those permitted in the Card Brand Rules, provided that any use of Bank’s marks, symbols or logos shall be in accordance with and subject to any branding guidelines provided by Bank. Merchant acknowledges that Member Bank and ProPay shall remain the sole and exclusive owners of their respective intellectual property and Confidential Information (defined below). Except to the extent expressly provided herein, no rights to Bank’s intellectual property or Confidential Information are granted hereunder, and all rights therein are expressly reserved.

3.5.  Authorizations with and without ProtectPay

(a) It is highly recommended that Merchant obtain the CVV2, CVC2 or CID information, as applicable, from each Card. However, Merchant must never store this value permanently. Merchant shall not submit an authorization on behalf of any third party.

(b) When a Merchant runs Transactions through ProPay’s ProtectPay service, it is recommended that Merchant identify the cardholder accepting payment for goods or services. When Merchant uses ProtectPay, ProPay will provide a means to collect and utilize the expiration date, and zip code or postal code from the cardholder's billing address. If the expiration date is not stored in ProtectPay, Merchant must obtain the Card expiration date and forward it to ProPay as part of the authorization request.

(c) When Merchant does not run Transactions through ProtectPay, Merchant shall obtain (using equipment meeting specifications determined by Bank) an authorization for each Transaction in accordance with the terms of exhibit A.

4.      MERCHANT’S WARRANTIES. Upon signing the Merchant Application, and each time Merchant submits a Transaction, Merchant represents and warrants that:

4.1.  Merchant has abided by the Merchant Agreement, and all applicable laws and the Card Brand Rules;

4.2.  Each statement made on the Merchant Application was true as of the date Merchant signed the Merchant Application agreeing to be bound by the Merchant Agreement;

4.3.  There have been no materially adverse changes in information provided in the Merchant Application or in Merchant’s financial condition, or management;

4.4.  Merchant does not do business under a trade name or style not previously disclosed in writing, and there has been no change in the nature of Merchant’s business or product lines that have not been previously disclosed to Bank;

4.5.  Each Transaction is genuine and arises from a bona fide sale of merchandise or services by Merchant, represents a valid obligation for the amount shown on the Transaction receipt, and does not involve the use of the Card for any other purpose;

4.6.  Merchant has title to the Transaction and Transaction receipt, there are no liens or other encumbrances on it, and Merchant has the authority to convey the Transaction for processing;

4.7.  No Transaction is subject to any set-off or counterclaim;

4.8.  No Transaction has been previously presented for processing unless allowed by the Card Brand Rules;

4.9.  Each statement on the Transaction receipt is true, and Merchant has no knowledge of facts that would impair the validity or collectability of the amount of the Transaction;

4.10.    The person who executes the Merchant Application on behalf of Merchant has the full power and authority to execute the Merchant Application and to enter into the Merchant Agreement;

4.11.    The Merchant Agreement is a legal, valid, and binding obligation of Merchant enforceable against Merchant in accordance with its terms;

4.12.    Merchant shall submit Transactions only in accordance with the information contained in the Merchant Application and the Merchant Agreement;

4.13.    Merchant has the power and authority to authorize the automatic funds transfer provided for in the Merchant Agreement;

4.14.    The Designated Account is owned and controlled by Merchant and will be open at all times during the Term and as long as the Merchant Reserve Account and Billing Reserve (as described below) are in effect;

4.15.    Merchant is not (a) a sanctioned person, (b) located in or operating under a license issued by a jurisdiction whose government has been identified by the U.S. Department of State as a sponsor of international terrorism under 22 U.S.C. 2371 or 50 U.S.C. App. 2405(j), (c) located in or operating under a license issued by a jurisdiction that has been designated as non-cooperative with international anti-money laundering principles or procedures by an intergovernmental group or organization of which the U.S. is a member, or (d) located in or operating under a license issued by a jurisdiction that has been designated by the U.S. Secretary of Treasury pursuant to 31 U.S.C. 5318A as warranting special measures due to money laundering concerns;

4.16.    Merchant will immediately notify Member Bank and ProPay in writing of any material changes to any information provided herein including but not limited to a change in Merchant’s legal entity, location, business type, or the types of goods and/or services offered for sale by Merchant;

4.17.    There is no action, suit or proceeding pending or, to Merchant’s knowledge, threatened that, if decided adversely, would materially impair Merchant’s financial condition or operations, or its ability to perform its obligations under this Merchant Agreement, or pay its debts; 

4.18.       Merchant complies fully with the High Risk Acceptable Use Policy; and

4.19.       Merchant shall ensure that only authorized individuals access Merchant’s ProPay Account to, among other things, effect transfers of funds to and/or from such account. Merchant shall be solely responsible for any loss that arises out of any unauthorized individual gaining access to Merchant’s ProPay Account using Merchant’s ID number and PIN, and shall indemnify, defend and hold Bank harmless from and against any such loss, unless such unauthorized access is solely the fault of Bank.

5.      CONFIDENTIALITY; DATA SECURITY.

5.1.   Merchant will treat as confidential: (a) the terms of the Merchant Agreement; (b) all information or data, of whatever nature, relating to Bank (including its operations, policies, procedures, accounts and personnel) accessed or used by or disclosed to Merchant in connection with the Merchant Agreement; (c) ProPay’s IRS W-9 form; and (d) all information or data that is proprietary to a third party (including Bank’s customers and contractors) and that Bank is obligated to treat as confidential, accessed or used by or disclosed to Merchant in connection with the Merchant Agreement (individually and collectively, “Confidential Information”). Merchant shall not use or disclose Confidential Information without Bank’s prior written consent. Merchant may only disclose Confidential Information to Merchant employees who have a need to know such information in connection with Merchant’s performance hereunder and who are bound to confidentiality restrictions no less restrictive than those herein. Merchant shall exercise at least the same degree of care to maintain the confidentiality of Confidential Information that it uses for its own similar information, but in no event less than a reasonable degree of care. The foregoing obligations shall not apply to any information that (i) is received from any third party source that is properly authorized to disclose it without restriction, (ii) is or becomes generally known to the public by publication or some other means other than a breach by Merchant or its employees of any agreement or confidentiality obligations, or (iii) is required by law to be divulged, provided that the request is proper and the disclosure does not exceed that which is required. In the case of (iii), Merchant will provide prior notice thereof and cooperate with Bank to limit disclosure. Upon Bank’s request, and upon termination or expiration of the Merchant Agreement, Merchant shall return or, only if requested by Bank, destroy all Confidential Information in its possession or control.  Merchant acknowledges that a breach of this section 5 may cause Bank irreparable injury and that Bank may have no adequate remedy at law. Accordingly, Bank may seek provisional or injunctive relief in addition to any other rights or remedies.

5.2.   Merchant Servicer” means a third-party agent that: (a) is engaged by a Merchant; (b) is not a member of the Card Brands; and (c) has access to cardholder data, or processes, stores, or transmits Transaction data. Merchant must notify Bank and receive Bank’s approval prior to engaging any Merchant Servicer in connection with Merchant’s acceptance of Cards or the submission of Transactions to Bank. Merchant shall provide Bank at least 60 days’ advance written notice of Merchant’s election to use a Merchant Servicer. Member Bank and/or ProPay may individually approve or deny the use of a Merchant Servicer in their sole and absolute discretion and at any time. If a Merchant Servicer is required to certify, register, or act in any fashion pursuant to the Card Brand Rules, Merchant shall cause such Merchant Servicer to cooperate with Member Bank in completing any steps required for registration, certification and/or action. Merchant is solely responsible for any and all applicable fees, costs, expenses and liabilities associated with such registration, certification and/or action. Bank shall in no event be liable to Merchant or any third party for any actions or inactions of Merchant Servicer(s) used by Merchant, and Merchant expressly assumes all such liability.

5.3.  The use of a Merchant Servicer or software or systems provided by a Merchant Servicer that has connectivity to the Internet poses an increased risk, and Merchant assumes all liability for such increased risks. If Merchant utilizes software or hardware with a connection to the Internet such hardware or software interacts in any capacity with the provision of services contemplated pursuant to this Merchant Agreement, Merchant is solely liable without limitation for any and all consequences of such interaction.

5.4.  Merchant agrees and shall ensure that Merchant Servicers utilized by Merchant provide the same levels of security as those required of Merchant, and that such Merchant Servicers transmit data in accordance with: (a) the required format(s) of the Card Brands; (b) the Card Brand Rules; and (c) the requirements of Bank. Merchant must have a written contract between itself and its Merchant Servicers that stipulates adherence to the provisions of such information security requirements. Merchant’s written contract with any such third party must contain provisions obligating the third party to comply with (to the extent applicable); (i) law, CISP, SDP, DISC, PCIDSS, PA-DSS, PIN and PED security requirements; (ii) all other Card Brand requirements pertaining to confidentiality and security and integrity of cardholder and Card transaction data; (iii) all rules prohibiting storage of certain Card transaction data; and (iii) all other applicable Card Brand Rules. Merchant will only allow Merchant Servicers to have access to cardholder data for the purposes that are authorized by the Card Brand Rules. Any fees, fines or penalties from noncompliance will be passed to the Merchant. Merchant shall indemnify and hold Member Bank and ProPay harmless against losses or damages arising from the acts or omissions of Merchant Servicers engaged by Merchant.

5.5.  Merchant must immediately notify Member Bank and ProPay of any suspected or confirmed loss or theft of materials or records that contain cardholder account numbers or Transaction information. In the event of a suspected or confirmed loss or theft Merchant shall provide immediate access to all facilities, systems, procedures, equipment, and documents as may be deemed appropriate by Bank or its designated representatives, regulators or auditors for inspection, audit, and copying as deemed appropriate by both Member Bank and ProPay in their individual sole discretion. Merchant shall be responsible for all costs associated with such inspection, audit, and copying however such costs may occur. Merchant shall make reasonable efforts to address and remedy the cause of the breach, intrusion, compromise or otherwise unauthorized access to cardholder account information.

5.6.  Merchant authorizes Bank to release its name and address to any third party whom the Bank determines needs to know such information in order for Bank to perform the Merchant Services and who has requested such information.

5.7.  Merchant will never (even in the event of including Merchant’s failure, bankruptcy, insolvency, or other suspension of business operations): (a) provide cardholder account numbers, personal cardholder information or Transaction information to anyone except Bank, the Card Brands, or Merchant’s servicers or agents for the purpose of assisting Merchant in completing Transactions, or as specifically consented to by cardholder or required by law or in response to valid legal process; (b) retain or store Card magnetic stripe, CVV, CVV2, CVC2 or CID data (including track data) subsequent to authorization for a Transaction; or (c) release any cardholder information over the telephone under any circumstances. If Merchant’s business fails or ceases to exist, Merchant is required to return to Bank all such information or provide proof of destruction of this information to Bank.

5.8.  Merchant agrees to establish security procedures to protect cardholder information and comply with the Visa Cardholder Information Security Program (CISP), MasterCard’s Site Data Protection (SDP) Program, Discover Information Security Compliance (DISC), American Express Data Security Requirements, and the Payment Card Industry (PCI) Data Security Standards. Detailed information about PCI DSS can be found at the PCI DSS Council’s Website: www.pcisecuritystandards.org. The Card Brands or Bank, and the respective representatives, may inspect the premises of Merchant or any servicer or agent engaged by Merchant for compliance with security requirements. Merchant acknowledges that any failure to comply with security requirements may result in the imposition of restrictions on Merchant or the permanent prohibition of Merchant’s participation in Card acceptance programs by the Card Brands. Merchant shall indemnify and hold Bank harmless against any losses or damages arising from Merchant's failure to comply with security procedures and any losses or damages arising from or related to Merchant's acts or omissions that result in a breach of data security, including but not limited to Merchant's non-participation in any breach security program ProPay may offer.

5.9.  ProPay acknowledges that it will maintain compliance with all applicable Card Brand Rules, including, without limitation, the PCI DSS requirements.

5.10.         Federal regulations enacted pursuant to the USA PATRIOT Act and other applicable laws require financial institutions with which ProPay has relationships to verify the identity of every person who seeks to open an account with a financial institution. Merchant shall provide documentary verification of Merchant’s identity, such as a driver’s license or passport for an individual and certified copy of organization documents for an entity in manner acceptable to Bank. Bank reserves the right to verify Merchant’s identity through other non-documentary methods as Bank deems appropriate in its sole discretion. Bank may retain a copy of any document it obtains to verify Merchant’s identity with the financial institution.

6.      CARD BRAND RULES.

6.1.  Merchant must comply with the Card Brand Rules, as the same may be amended from time to time. The Card Brand Rules may change with little or no advance notice and Merchant will be bound by all such changes. If Merchant objects to any change in the Card Brand Rules, it must immediately stop accepting new Transactions for Cards governed by the change. The Card Brand Rules will govern if there is any inconsistency between the Merchant Agreement and the Card Brand Rules. If there is an inconsistency between the Merchant Agreement (including the Card Brand Rules) and applicable law, applicable law will govern, but only to the extent necessary to resolve the inconsistency.

6.2.  Card Brand Rules of the debit networks may differ among them with respect to the Transactions they allow. Bank, at its discretion, may require that the most restrictive requirements of one debit network apply to all of Merchant’s online debit Card Transactions, regardless of Card type.

7.      APPLICABLE LAW; MERCHANT’S BUSINESS; OTHER PROCESSORS.

7.1.  Merchant will comply with all applicable law, including but not limited to laws and regulations regarding anti-money laundering compliance, in completing Transactions, submitting them to Bank, performing its obligations under the Merchant Agreement, and otherwise conducting its business.

7.2.  Merchant will give Bank at least 30 days’ prior written notice before any change in Merchant’s name or location, any change in ownership or management of Merchant’s business, any sale, assignment, rental, lease or transfer of ownership of any location that accepts Cards, or any material change in information concerning Merchant in the Merchant Application, and material change in the type or nature of the business carried out by Merchant or otherwise required to be provided to Bank.

7.3.  To the extent permitted by applicable law, Merchant agrees that it will not participate in a Card processing program with another financial institution or processor without Bank’s written approval.

8.      CREDIT REPORTS AND OTHER INFORMATION.

8.1.     From time to time, Bank may obtain credit and other information on Merchant, owners and officers of Merchant, and any and all personal guarantors of Merchant, from others (such as customers and suppliers of Merchant, lenders and credit reporting agencies), and furnish information on Merchant’s relationship with Bank and Bank’s experience with Merchant to others seeking the information.

8.2.     Merchant will provide Bank with updated business and financial information concerning Merchant, including financial statements, tax returns, evidence of required licenses and other information and documents Bank may reasonably request from time to time. Merchant shall further provide Bank such information as it may request for the making of insurance claim, regulatory or other filings related to Merchant’s activity pursuant to this Agreement. All material marked “confidential” which Bank receives from Merchant will be used only by Bank or the Card Brands in performing the Merchant Services under this Merchant Agreement or related services and reporting.  Bank and any Card Brand, regulator, auditor or any other entity having authority may audit Merchant’s records relating to this Merchant Agreement. Merchant shall provide all documentation, information or other inspection rights requested by Bank’s regulators or auditors or otherwise to enable Bank to meet the requirements of applicable law. Without limiting the generality of the foregoing, Merchant understands and agrees that if, at the time of signing this Merchant Agreement Merchant is undergoing a forensic investigation, Merchant must notify Bank and fully cooperate with the investigation until it is completed.

8.3.     Merchant authorizes Bank to release and use information collected in connection with Bank’s provision of the Merchant Services to third parties that provide services to Bank or Merchant or to any third party that requests and has a reason to know such information, including but not limited to the Card Brands, and any third party having regulatory control over the parties.

9.      TERM; TERMINATION.

9.1.       Term/Renewal. The initial term of this Merchant Agreement shall be for the term of three years (the “Initial Term”) from the Effective Date. By either Merchant’s signature on the Merchant Application or Merchant’s processing a Transaction with Bank, Merchant confirms acceptance of the Merchant Agreement. At the expiration of the Initial Term, this Merchant Agreement will automatically renew for successive one year periods (each a “Renewal Term” and collectively with the Initial Term the “Term”) unless a party provides the other parties with notice of its intent not to renew the Merchant Agreement at least 90 days prior to the expiration of the then-current term.

9.2.       Termination.

(a)    Termination without Cause. Bank or Bank’s designated representative may terminate the Merchant Agreement as to all Card types or individually specified Card types, without cause, upon 30 days’ advance written notice.

(b)    Termination for Cause by Bank. Bank or Bank’s designated representative may terminate the Merchant Agreement in its sole and absolute discretion, effective immediately, upon written, electronic or oral notice, except as otherwise stated in the Merchant Agreement, to Merchant if Bank reasonably determines that any of the following conditions exists:

(i)     Merchant has violated any provision of the Merchant Agreement.

(ii)   There is a material adverse change in Merchant’s financial condition, material change in Merchant’s processing activity, processing activity inconsistent with the Merchant Application, or Bank determines in its sole discretion that Merchant’s processing activity could result in a loss to Bank.

(iii)  A petition in bankruptcy has been filed by or against Merchant, Merchant is generally unable to pay its debts as they become due, a receiver, custodian, trustee, liquidator or similar official is appointed for a substantial portion of Merchant’s business, there is a general assignment for the benefit creditors, or the business terminates.

(iv)  Any information which Merchant provided to Bank, including Merchant Application information, was false, incomplete or misleading when received, or has materially changed since Merchant provided such information.

(v)    At any time during the term of the Merchant Agreement, Merchant has had a monthly ratio of Chargebacks to Transactions exceeding one percent, or Chargebacks are in excess of three percent of any monthly dollar amount of Transactions.

(vi)     Merchant or any of Merchant’s officers or employees has been involved in processing Transactions with Bank or other parties arising from fraudulent or otherwise unauthorized transactions.

(vii)     Merchant is or will be unable or unwilling to perform its obligations under the Merchant Agreement or any applicable laws.

(viii)    Merchant has failed to pay Bank any amount when due.

(ix)   Merchant has failed to promptly perform or discharge any obligation under the Merchant Agreement, the Merchant Reserve Account or the Billing Reserve.

(x)    Any of Merchant’s representations or warranties made in connection with the Merchant Agreement was not true or accurate when given.

(xi)     Merchant has defaulted on any agreement it has with Bank.

(xii)      Bank is served with legal demand, order or process seeking to attach or garnish any of the provisional credits arising out of or relating to the Merchant Agreement, Merchant’s funds or property in Bank’s possession.

(xiii)    The Card Brand Rules are amended in any way so that the continued existence of the Merchant Agreement would cause Bank to be in breach of such Card Brand Rules.

(xiv)     Any guaranty supporting Merchant’s obligations is revoked, withdrawn or terminated or altered in any way.

(xv)      Any governmental entity initiates proceedings against Merchant, or Bank reasonably believes that a governmental entity may do so.

(xvi)     If any circumstances arise regarding Merchant or its business that create harm or loss of goodwill to Bank or any Card Association.

(c)    Termination for Cause by Merchant. Merchant may terminate the Merchant Agreement in the event of a material breach of the terms of the Merchant Agreement by Bank, provided Merchant gives Bank written notice of any alleged breach and such breach remains uncured for a period of 30 days following receipt of written notice by the Bank.

(d)    Liquidated Damages for Early Termination.

(i)       In addition to all other remedies available to Bank under the Merchant Agreement or as otherwise available in law or equity, if the Merchant Agreement is terminated prior to the expiration of the applicable Term for any reason other than for a material, uncured breach by Bank, Merchant agrees to pay Bank as liquidated damages (and not as a penalty), a sum computed by multiplying (i) the average of the monthly fees paid by Merchant to Bank over the immediately preceding six months and (ii) the number of months remaining in the unexpired Term. Payment of liquidated damages for termination will not relieve either party of any obligations arising prior to the date of termination.

(ii)      Merchant agrees that such liquidated damages as calculated above shall also be due to Bank if Merchant discontinues submitting Transactions for processing during the Term for a period of 90 consecutive days, and is not designated on the Merchant Application, or by notice to Bank, as a seasonal merchant or as otherwise agreed to by Bank.

(iii)    Merchant acknowledges and agrees that the liquidated damages are a reasonable computation of the financial harm caused by the termination of the Merchant Agreement by Merchant.

(e)    Member Bank’s or ProPay’s rights of termination under the Merchant Agreement are cumulative. A specific right of termination shall not limit any other right of Bank to terminate the Merchant Agreement expressed elsewhere in the Merchant Agreement. Notice of termination may be given orally or in writing, if given orally, shall be confirmed in writing, except as otherwise stated in the Merchant Agreement.

(f)     Upon termination, Merchant’s rights to complete Transactions and submit them to Bank will cease. Termination of the Merchant Agreement will not terminate the rights and obligations of Merchant and Bank relating to acts or omissions occurring before termination, including for example, any fees or other service fees owed to Bank, any Transactions processed for Merchant by Bank (whether before or after termination), Merchant’s Chargeback and indemnity obligations, and the security interest granted to Bank in the Merchant Agreement.

(g)    It is understood that a file for terminated merchants referred to as Member Alert to Control High-Risk Merchants (“MATCH”), formerly known as the Terminated Merchant File or “TMF”, is managed and maintained by Mastercard and utilized by the Card Brands and acquiring banks to identify the names of any business (and its principals) that have been terminated for certain reasons, including fraud, depositing excessive counterfeit paper, excessive unauthorized transactions, excessive chargebacks, depositing paper for others (laundering), bankruptcy or breach of a merchant agreement. Merchant acknowledges that Bank is required to report Merchant to the MATCH (and/or on the Consortium Merchant Negative File or “CMNF” published by Discover® Network) if the Merchant Agreement is terminated for any of the foregoing reasons or other reasons as may be modified by the Card Associations. Merchant agrees and consents to such reporting in the event of the termination of the Merchant Agreement for any of the foregoing reasons.

10.   MERCHANT RESERVE. If Bank believes there is a high level of risk associated with Merchant’s use of the Merchant Services, Bank may require the establishment of a reserve (“Reserve”). Factors Bank may consider are in requiring a reserve are chargebacks, returns, unfulfilled orders, or credit risk. Bank will hold funds in Reserve for as long as it deems necessary to mitigate risks associated with Merchant’s use of the Merchant Services. If Bank does establish a Reserve, Bank will provide Merchant with notice specifying the terms of the Reserve, which terms Bank may change at any time on notice to Merchant. Merchant will remain liable for all obligations related to its use of the Merchant Services even after the release of any Reserve. The Reserve may be raised, reduced or removed at any time by Bank, in its sole discretion. Funds in reserve will be held in an account maintained by Member Bank (the “Merchant Reserve Account”). The Merchant Reserve Account will be under the sole control of Member Bank. Merchant will have no right of withdrawal from the Merchant Reserve Account, and ProPay will not have access to or hold funds in the Merchant Reserve Account. Bank will reasonably determine the amount of funds in the Merchant Reserve Account based on the level of risk Merchant presents. Bank may fund the Reserve in any of the following ways: pulling funds directly from Merchant’s ProPay Account; withholding a portion of transactions; requiring a payment directly from Merchant; and/or debiting the Designated Account. Member Bank may continue to deposit funds in the Merchant Reserve Account after termination of the Merchant Agreement.

11.   BILLING RESERVE. If ProPay believes there is a high level of risk that Merchant will be unable to pay the fees owing under this Merchant Agreement, ProPay may Bank may require the establishment of a billing reserve (“Billing Reserve”). ProPay will hold funds in the Billing Reserve for as long as it deems necessary to mitigate risks associated with Merchant’s ability to pay fees. If ProPay does establish a Billing Reserve, it will provide Merchant with notice specifying the terms of the Billing Reserve, which terms ProPay may change at any time on notice to Merchant. Merchant will remain liable for all obligations related to its use of the Merchant Services even after the release of any Billing Reserve. The Billing Reserve may be raised, reduced or removed at any time by ProPay, in its sole discretion. Funds in the Billing Reserve will be held and owned by ProPay. ProPay will reasonably determine the amount of funds in the Billing Reserve based on the level of risk Merchant presents. ProPay may fund the Billing Reserve in any of the following ways: instructing Member Bank to pull funds from Merchant’s ProPay Account; instructing Member Bank to withhold a portion of transactions; requiring a payment directly from Merchant; and/or debiting the Designated Account. ProPay may instruct Member Bank to continue to deposit funds in the Billing Reserve after termination of the Merchant Agreement. At its sole discretion, ProPay may return some or all of the funds in the Billing Reserve to Merchant.

12.   SECURITY INTEREST.

12.1.  Merchant hereby grants to Bank a security interest in any funds held in Merchant’s ProPay Account and in the Merchant Reserve Account, to secure the performance by Merchant of its obligations to Bank under this Merchant Agreement. Bank may enforce such security interest without notice or demand. Upon request of Bank, Merchant will execute one or more financing statements or other documents to perfect this security interest.

12.2.  This Merchant Agreement will constitute a security agreement under the Uniform Commercial Code under which Merchant grants Bank a security interest in and lien upon: (1) all funds owing Merchant under this Merchant Agreement, regardless of the source of such funds; (2) all funds in the Merchant Reserve Account; (3) present and future Transactions; (4) any amount which may be due to Merchant under this Merchant Agreement, including, without limitation all rights to receive any payments or credits under this Merchant Agreement; and (e) upon Bank’s request, any other security to secure Merchant’s obligations under this Merchant Agreement (collectively, the "Secured Assets"). Merchant agrees to execute financing statements or other documents to evidence this security interest. These security interests and liens will secure all of Merchant’s obligations under this Merchant Agreement and any other agreements now existing or later entered into between us and Bank will have all rights afforded under the Uniform Commercial Code, Law, and in equity. Bank may exercise this security interest without notice or demand by making an immediate withdrawal or freezing of Merchant’s Secured Assets. Merchant warrants that no other person or entity has a security interest in the Secured Assets and Merchant agrees to obtain from Bank written consent prior to granting a security interest of any kind in the Secured Assets to a third party.

13.   CUSTOMER CLAIMS. To the extent that Bank has paid or may pay a Chargeback or credit transaction receipt, Merchant will be obligated to reimburse Bank for any sums Bank pays. If Merchant does not reimburse Bank, Bank will have all of the rights and remedies of cardholders, including the cardholders’ rights under 11 U.S.C. §507(a)(6). Bank may assert any claim on behalf of a cardholder individually or on behalf of all cardholders as a class.

14.      PROCESSING FEES.

14.1.    Fee Schedule. Merchant will pay the fees in the amount specified in the fee schedule or as otherwise provided for in this Merchant Agreement or an addendum thereto. Monthly recurring fees will be assessed upon approval of the Merchant Application. Bank may increase the fees, including, without limitation, introducing new products or services, by giving Merchant 15 days’ advance written notice effective for Transactions submitted on and after the effective date of the change.

14.2.    Card Brand Actions. Bank will not be required to provide Merchant with 15 days’ notice of an increase in fees if any Card Brand or any other entity having such authority increases fees and the effective date for implementation of the increased fees is less than 15 days. In such cases, Bank shall make reasonable efforts to notify Merchant but failure to provide notice of will not affect Merchant’s obligation to pay the increased fees. 

14.3.    Government and Regulatory Actions. Bank will not be required to provide Merchant with advance notice for any increase in fees resulting from any fine, charge, fee or cost incurred in connection with any state, federal or other regulatory action, change in laws or regulations or escheatment of Merchant’s funds. Bank shall make reasonable efforts to notify Merchant but failure to provide notice of will not affect Merchant’s obligation to pay the increased fees.

14.4.    Payment and Authorization to Debit Designated Account. Merchant authorizes Bank to deduct fees and other service charges, fines, obligations, liabilities, or any other amounts owed by Merchant to Bank from amounts due Merchant, from the Designated Account, or from the Merchant Reserve Account or Billing Reserve. This authorization will remain in effect until the Merchant Reserve Account and Billing Reserve are closed. If Merchant changes the Designated Account, this authorization will apply to Merchant’s subsequent Designated Account. Merchant will pay the amounts due by the next business day if sufficient funds are not available in any of these accounts. Bank may suspend accepting Transactions or releasing ProPay Account funds to Merchant until Merchant has paid outstanding fees.

15.      PROPAY’S STATUS WEBSITE. The website status.propay.com is ProPay’s communication tool for operational issues. Merchant is encouraged to visit status.propay.com at any time to review the operational status of Merchant Services and subscribe to real time operational updates via email, SMS, slack or webhook. If Merchant does subscribe, it is Merchant’s responsibility to keep its contact information updated at status.propay.com to assure that the proper individual(s) receive the updates.  If Merchant does not subscribe, Merchant acknowledges that it may miss out on important updates about ProPay’s system.

16.      NO BANK WARRANTIES. To the maximum extent permitted by applicable law, Bank specifically disclaims all warranties of any kind, expressed or implied, including, without limitation, warranties of title, availability, non-infringement, merchantability, fitness for a particular purpose, or any warranty arising out of any proposal, description, specification, course of dealing, or sample. The Merchant Services are offered solely on an “as is” and “as available” basis. Bank expressly disclaims any representation or warranty that the Merchant Services will be uninterrupted or error-free.

17.   INDEMNIFICATION; LIMITATION OF LIABILITY.

17.1.  Merchant shall indemnify Bank, including their respective officers, directors, employees, and agents, against and hold them harmless from any and all claims, demands, settlements, losses, damages, liabilities, costs and expenses of any kind (including reasonable attorney’s fees) of any party arising from or based upon any act or omission of Merchant, Merchant’s employees, Merchant’s designated representatives, servicers, or agents, in connection with or arising out of this Merchant Agreement, the duties to be performed by Merchant pursuant to the Merchant Agreement, any Transactions which Merchant submits to Bank (including Chargebacks), or Merchant’s violation of the Card Brand Rules or any requirements of applicable law. If Bank is made a party to any litigation, proceeding, arbitration, bankruptcy proceeding, or other legal process (collectively “Actions”) commenced by any third party, Merchant shall protect and hold Bank harmless from and with respect to the Actions and shall indemnify such party from and against all costs, expenses, and attorney’s fees, including in-house legal fees, incurred or paid in connection with the Action, together with any judgments, settlements, losses, damages or other liabilities. Merchant shall indemnify, defend, and hold harmless Bank from and against any hacking, infiltration, or compromise of Merchant’s systems or the systems of Merchant, Merchant servicers or Merchant’s agent(s), or designated representatives.

17.2.  Bank will not accept responsibility for errors, acts, or failure to act by others, including but not limited to, Merchant servicers, agents, third party suppliers of software, equipment or services; or, banks, communication common carriers, data processors or clearinghouses through which transactions may be passed, originated and/or authorized. Bank will not be responsible for any loss, liability or delay caused by fires, earthquakes, war, civil disturbances, power surges or failures, acts of governments, acts of terrorism, labor disputes, failures in communication networks, legal constraints or other events beyond the control of Bank. Bank undertakes no duties to Merchant other than the duties expressly provided for in the Merchant Agreement, and any and all other or additional duties that may be imposed upon Bank in law or equity are hereby irrevocably waived and released to the maximum extent permitted by law. In any event, to the maximum extent permitted by applicable law, Bank’s aggregate liability to Merchant, whether arising in contract, tort (including, without limitation, negligence and strict liability) or otherwise, shall not exceed of $10,000.

17.3.  To the maximum extent permitted by law, Bank will not be liable for special, incidental, indirect, consequential or exemplary damages or for any interruption or loss of use, data, business or profits, whether or not such loss or damages were foreseeable or Bank was advised of the possibility thereof and regardless of whether any limited remedy herein fails of its essential purpose.

18.   BANKRUPTCY.

18.1.    Merchant will notify Bank immediately if any bankruptcy, insolvency or similar petition is filed by or against Merchant. Merchant acknowledges that this Merchant Agreement constitutes an executory contract to extend credit or financial accommodations as defined in 11 U.S.C. §365(c)(2) and that the Merchant Agreement cannot be assumed or assigned in the event of bankruptcy. In the event of Merchant’s bankruptcy, Bank shall be entitled to suspend further performance under this Merchant Agreement.

18.2.    In the event of a bankruptcy proceeding, Merchant must establish a Merchant Reserve Account and/or Billing Reserve, or maintain a previously established and then-current Merchant Reserve Account and/or Billing Reserve in amounts required by Bank. Bank will have the right to set-off against the Merchant Reserve Account and Billing Reserve for any and all obligations which Merchant may owe Bank, without regard as to whether the obligations relate to Transactions initiated or created before or after the filing of the bankruptcy petition.

19.   GENERAL PROVISIONS.

19.1.    Amendments. Unless otherwise provided for in this Merchant Agreement, Bank may amend this Merchant Agreement at any time by providing Merchant with 15 days’ prior notice by: (a) sending Merchant written notice of such amendment as per section 19.2 below, or (b) posting such amendment to ProPay’s website as provided in section 2. The amendment will become effective unless Bank receives Merchant’s notice terminating this Merchant Agreement before the effective date of such amendment. Bank may amend this Merchant Agreement upon less than 15 days’ prior notice if Bank reasonably determines immediate modification is required by requirements of Law, Card Brand Rules or any adverse change in Merchant’s financial condition. Amendments submitted by Merchant will bind Bank only if in writing and approved and signed by Bank’s authorized officer(s).

19.2.    Notices. Any notices or other communications required or permitted by this Merchant Agreement shall be in writing and shall be delivered either by personal delivery, by a nationally recognized overnight courier service, electronic mail or other electronic means, by first class mail or by certified or registered mail, return receipt requested, addressed as set forth above or to such other address as any party shall have designated to the others by written notice given in the manner set forth above. Notices and approvals required under this Merchant Agreement shall be deemed given: one day after sent, if sent by overnight courier; when delivered and receipted for, if hand delivered; when received, if sent by facsimile, electronic mail or other electronic means or by first class mail; or when receipted for (or upon the date of attempted delivery where delivery is refused or unclaimed), if sent by certified or registered mail, return receipt requested.

19.3.    Assignment. The Merchant Agreement is binding upon the successors and assigns of Bank and Merchant. Merchant will not assign or transfer (including by merger, change of control or operation of law) the Merchant Agreement (in whole or in part) to another person or entity without Bank’s prior written consent and any purported assignment made without Bank’s consent will be void.

19.4.    Waiver. Bank’s failure to enforce this Merchant Agreement will not waive Bank’s rights under this Merchant Agreement. Waivers of any provision of this Merchant Agreement must be in writing and signed by Bank. A waiver in one instance will not apply to other occasions unless that intent is clear from the signed waiver.

19.5.    Agency Relationship. Merchant authorizes Bank with respect to the Services to act as Merchant’s agent for the limited purposes of holding, receiving, and disbursing funds on Merchant’s behalf. Merchant’s authorization permits Bank to generate an electronic funds transfer to process each Transaction. This authorization will continue until Merchant’s ProPay Account is closed or terminated. Merchant agrees that Bank’s receipt of Transaction proceeds satisfies Merchant’s customers’ obligations to Merchant. Bank will remit to Merchant funds actually received by Bank on Merchant’s behalf, less amounts owed to Bank, subject to any Chargebacks or reserve withheld or applied as per this agreement.

19.6.    Survival. Sections 2, 3, 4, 5, 6, 7, 9, 10, 11, 12, 13, 14, 16, 17, 19.1, 19.2, 19.3, 19.4, 19.9, 19.10, and 19.11 will survive termination of the Merchant Agreement.

19.7.    Severability. If any one or more of the provisions contained in this Merchant Agreement shall in any jurisdiction be held or determined by a court having jurisdiction to be invalid, illegal or unenforceable for any reason, such provision shall be deemed modified so as to be enforceable to the maximum extent permitted by law consistent with the intent of the parties as herein expressed, and such invalidity shall not affect the remaining provisions of this Merchant Agreement, which shall continue in full force and effect.

19.8.    No Remedies Exclusive. No right or remedy granted pursuant to the terms of this Merchant Agreement shall be deemed to be exclusive of any other right or remedy available at law or equity. All such rights and remedies, whether granted now or hereafter, shall be deemed to be cumulative and not alternative, and may be exercised concurrently, independently or successively.

19.9.    Governing Law and Venue. The laws of State of Utah (without regard to its conflicts of law provisions) govern all matters arising out of or relating to this Merchant Agreement. The parties consent to the exclusive jurisdiction and venue of the federal or state courts located in Salt Lake County, Utah for any legal proceeding pertaining to this Merchant Agreement. All performances due and Transactions undertaken pursuant to this Merchant Agreement are deemed to be due or to have occurred in the City of Lehi, Utah County, State of Utah, and the use of the Merchant Services by Merchant is the transaction of business within the State of Utah.

19.10.    Jury Trial Waiver. The parties waive any right to trial by jury in any action arising out of, in connection with, or in any way related to this Merchant Agreement.

19.11.      Attorney’s Fees. The prevailing party in an action brought against the other to enforce the terms of this Merchant Agreement or any rights or obligations hereunder, will be entitled to receive its reasonable costs and expenses of bringing such action including its reasonable attorney’s fees in addition to any other recoverable damages.

19.12.    No Third party Beneficiaries. This Merchant Agreement is for the exclusive benefit of the parties, and no other person or entity, including any affiliate or creditor of any party, shall have any right or claim against any party by reason of this Merchant Agreement or shall be entitled to enforce any provision of this Merchant Agreement against any party.

19.13.    Entire Agreement. This Merchant Agreement constitutes the entire agreement among the parties, and supersedes all prior oral and written negotiations with respect to the subject matter hereof.

19.14.    Headings. Headings listed in this Merchant Agreement are inserted for convenience only, do not constitute a part of this Merchant Agreement, and are not to be considered in connection with the interpretation or enforcement of this Merchant Agreement.

19.15.    Review of Books and Records. Bank shall have the right, at its cost and expense and by providing not less than 30 days’ prior written notice to Merchant, to review those books and records of Merchant that pertain to the performance by Merchant of its obligations under this Merchant Agreement, for the purpose of confirming or assessing compliance with the terms and conditions of this Merchant Agreement. Any such review shall be conducted during normal business hours at a place reasonably designated by Merchant.

19.16.    Counterparts. The parties agree that this Merchant Agreement may be executed (a) in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same agreement; and (b) by using an electronic or handwritten signature, which are of equal effect, whether on original or electronic copies.

 

EXHIBIT A

AUTHORIZATION FOR TRANSACTIONS WITHOUT PROTECTPAY

1.      CARDHOLDER INFORMATION. Merchant will identify the cardholder when accepting payment for products sold or services rendered. As part of the cardholder identification process, Merchant will obtain the expiration date, and ZIP Code or Postal Code from the cardholder's billing address. Merchant will not honor any Card if: (a) the Card has expired; or, (b) the account number embossed on the Card is listed on a current Electronic Warning Bulletin file.

2.      AUTHORIZATION

2.1   Authorization required for all Transactions. Merchant will obtain authorization via ProPay's web site, touch-tone phone system, Merchant Application Program Interface (“API”) or other method acceptable to ProPay prior to completing any Transaction. Merchant will follow any instructions received during the authorization process. Upon receipt of authorization, Merchant may consummate only the Transaction authorized and must note on the Merchant’s record of cardholder purchase the authorization number. Where authorization is obtained, Merchant will be deemed to warrant the true identity of the customer as the cardholder. Transactions will be deemed invalid on Cards that are expired, whether or not an authorization has been obtained. Merchant must obtain the Card expiration date and forward it as part of the authorization request.

3.      PRESENTMENT OF SALES TRANSMITTALS

3.1   Forms. Merchant will transmit to ProPay necessary information to document each Transaction. Each Transaction will contain: (a) Merchant name and account identifier; (b) the Card expiration date; and, (c) the total amount of the sale (including any applicable taxes) or credit Transaction. ProPay may also require addition information, such as: (a) zip code of customer’s billing address; (b) CVV2 code or the equivalent; (c) a brief description of the goods or services involved; (d) the Transaction authorization number; and, (e) if applicable, adjacent to the signature line, a notation that all sales are final.

3.2   Delivery and Retention of Transactions. Merchant will retain the merchant copy of the Transaction or credit memorandum for at least 25 months following the date the Merchant initiates the Transaction. When Merchant retains this information, Merchant must do so in accordance with the applicable Card Brand Rules, security and confidentiality requirements as referenced in the Merchant Services Agreement.

3.3   Electronic Transmission. Merchant will enter at the ProPay web site, or transmit via API to ProPay, the data related to a Transaction no later than 72 hours from the date the Merchant initiates the Transaction. Information regarding a sales or credit Transaction transmitted with a computer or magnetic stripe reading terminal will be transmitted by Merchant to ProPay or its agent in the form ProPay from time to time specifies, or as required under Card Brand Rules. If ProPay requests a copy of a Transaction, Merchant’s record of return or refund to be credited to cardholder’s account (“Credit Voucher”) or other Transaction evidence, Merchant will provide it within three (3) business days following the request. Merchant acknowledges that ProPay shall have Chargeback rights with respect to any Transaction or Credit Voucher for which Merchant fails to provide such documents within such time period.

 

 

EXHIBIT B

API LICENSE AGREEMENT

1.      Purpose. ProPay owns and operates a proprietary payment network. ProPay has developed the API, which is for use by Merchant to build software applications that interface with or otherwise communicate with ProPay’s payment network. ProPay provides this license to Merchant to enable Merchant’s interaction with ProPay’s payment network via ProPay’s API. All elements of ProPay’s API and Merchant’s specific Authorization Information (as defined below) will constitute the (“Licensed Materials”).

2.      License Grant. Subject to the terms and conditions of this license and the Merchant Agreement it is attached to, ProPay grants to Merchant a nontransferable, nonexclusive, non-sublicense-able, limited license to use the Licensed Materials solely in accordance with this license. Merchant may do the following under this license:

         2.1   Sign up users for payment and/or merchant accounts;

         2.2   Transfer money, including commission payments, between ProPay accounts;

         2.3   Take action against payment cards consisting of authorizing, capturing, voiding, and refunding transactions;

         2.4   Initiate SpendBack transactions;         

         2.5   Initiate SplitPay transactions; and

         2.6   Make informational requests regarding ProPay accounts, subject to system or API limitations.

Any combination of subsections 2.1–2.6 above will be deemed a “Permitted Use.” A Permitted Use is subject to all restrictions identified herein. ProPay shall provide to Merchant confidential data which is specific to Merchant that will permit Merchant to access and use the API (“Authorization Information”). The Authorization Information is the property of ProPay and may be immediately revoked or terminated by ProPay if Merchant shares the same with any third party (other than Third party Service Providers from Merchant), if compromised by a third party, or if Merchant uses or accesses the API in any way not expressly permitted or granted under this license.

3.      Restrictions. ProPay reserves all rights in the Licensed Materials not expressly granted herein. Except as expressly provided herein: (a) Merchant shall not copy, nor allow others to copy, any of the Licensed Materials; (b) Merchant shall not sell, assign, pledge, lease, deliver, sublicense or otherwise transfer the Licensed Materials or any part thereof to any third party; (c) Merchant shall not disclose to any third party or permit any third party to have access to or use the Licensed Materials or any part thereof; (d) Merchant shall not modify, alter or change the Licensed Materials or any part thereof, or develop any diagram, drawing or other documentation based on the Licensed Materials or the information contained therein; (e) Merchant shall not use the Licensed Materials to develop, manufacture, modify or reproduce any other product or service that it has reason to know, or is notified by ProPay, that competes with any ProPay product or service manufactured and/or distributed by or for ProPay; (f) Merchant may not reverse engineer the Licensed Materials; (g) Merchant may not distribute, facilitate, enable, or allow access or linking to ProPay’s payment network from any location or source other than Merchant’s Website; and (h) Merchant shall not permit or enable third parties to copy or obtain ProPay data from Merchant’s Website in any unauthorized manner including, but not limited to, the use of using robots, spiders, scraping, or any other technology. Notwithstanding the foregoing, Merchant may disclose the Licensed Materials to any third party service provider for the sole purpose of accomplishing a Permitted Use of this license provided that said third party agrees in writing to be bound by all the terms and conditions of this license.

4.      Ownership of Licensed Materials. Merchant acknowledges and agrees that all right, title and interest in and to the Licensed Materials and all patents, copyrights, trademarks, trade names, trade secrets and other proprietary rights related to or residing in the Licensed Materials, and all copies of all or any part thereof in any form whatsoever, will remain with ProPay. Merchant understands and agrees that the Licensed Materials contain trade secrets of ProPay that must be kept confidential. Merchant shall promptly notify ProPay of any actual or threatened misappropriation or infringement of ProPay’s proprietary rights which may come to Merchant’s attention.

 5.     Proprietary Notices. Merchant shall not remove from the Licensed Materials, or alter, any of ProPay’s trademarks, trade names, logos, patent or copyright notices, or other notices or markings, or add any other notices or markings to the Licensed Materials, without the prior express written consent of ProPay. Merchant shall duplicate all such proprietary rights notices on each copy of the Licensed Materials permitted to be made hereunder.

8.      Breach. Merchant understands that if it fails to comply with the provisions of this license, ProPay will suffer irreparable harm, which may not be adequately compensated for by monetary damages alone. Merchant, therefore, agrees that in the event of its breach or threatened breach of this license, ProPay will be entitled to monetary damages as well as injunctive and/or other preliminary or equitable relief, in addition to any other remedies as available by law.

 

EXHIBIT C

AMERICAN EXPRESS® CARD ACCEPTANCE

This Exhibit applies only if Merchant accepts American Express Cards. If there is a conflict between any of the following sections and any other section of the Terms and Conditions as they apply to American Express Cards, the following sections will govern. Bank is not a party to the following sections.

1.      American Express Compliance. Sponsored Merchant agrees to comply with all American Express Card Brand Rules, Applicable Laws, rules and regulations, including the American Express Merchant Operating Guide requirements, which are incorporated into this agreement by reference as if they were fully set forth in the Merchant Agreement. The American Express Merchant Operating Guide may be viewed at: www.americanexpress.com/merchantopguide. Any undefined capitalized terms set forth in this section have the meanings given to them in the American Express Merchant Operating Guide.

2.      High Charge Volume Sponsored Merchants. In the event that Sponsored Merchant’s estimated annual American Express charge volume becomes $1,000,000 USD or greater, Sponsored Merchant may, at the discretion of ProPay and American Express become a direct Card-accepting merchant under the standard American Express acceptance program and cease to be a sponsored Merchant under Merchant Services Provider.  As a direct Card-accepting merchant, Sponsored Merchant will be bound by the then-current American Express Card acceptance agreement and American Express’s discount and other fees and assessments shall apply.

3.      Processing Restrictions. Sponsored Merchant is prohibited from processing Transactions or receiving payments on behalf of, or (unless required by law) re-directing payments to any other party.

4.      Third party Beneficiary Rights.

a.      Sponsored Merchant confers on American Express the beneficiary rights, but not obligations, to the Sponsored Merchant’s Merchant Agreement and subsequent addendums (collectively the “Merchant Agreement”) between Sponsored Merchant and Payment Service Provider  and, as such, American Express has the express right to enforce the terms of the Merchant Agreement against the Sponsored Merchant.

b.      Sponsored Merchant warrants that it does not hold third party beneficiary rights to any agreements between Payment Service Provider  and American Express and at no time will attempt to enforce any such agreements against American Express.

5.      American Express Liability. SPONSORED MERCHANT ACKNOWLEDGES AND AGREES THAT IN NO EVENT SHALL AMERICAN EXPRESS, ITS AFFFILIATES, AGENTS, SUCCESSORS, OR ASSIGNS BE LIABLE TO SPONSORED MERCHANT FOR ANY DAMAGES, LOSSES, OR COSTS INCURRED, INCLUDING INCIDENTAL, INDIRECT, SPECULATIVE, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND (WHETHER BASED ON CONTRACT, TORT, INCLUDING NEGLIGENCE, STRICT LIABILITY, FRAUD, OR OTHERWISE, OR STATUTES, REGULATIONS, OR ANY OTHER THEORY), ARISING OUT OF OR IN CONNECTION WITH THE MERCHANT AGREEMENT.

6.      Merchant Website Display Requirements. Merchant will adhere to the following website information display guidelines in the event a Merchant has a website and/or operates an e-commerce business (“Merchant Website”). The Merchant Website must display the following:

a.      An accurate description of the goods/services offered, including the currency type for the Transaction (e.g., U.S. Dollars). Note: Transaction currency must be in U.S. Dollars.

b.      Merchant's physical address in the U.S.

c.      An email address or telephone number for customer service disputes.

d.      Return/refund policy.

e.      A description of the Merchant's delivery policy (e.g., no overnight delivery).

f.       A description of the Merchant's security practices (e.g., information highlighting security practices the Merchant uses to secure Transactions on its systems, including Transactions conducted on the Internet).

g.      A statement of known export restrictions, tariffs, and any other regulations.

h.      A privacy statement regarding the type of personal information collected and how the information is used. Additionally, Merchant must provide to customers the option to decline being included in marketing campaigns or having their personal information included on lists sold to third parties.