Merchant Processing Agreement Template

This Merchant Processing Agreement (“Agreement”) is entered into as of [Effective Date], by and between:

Processor: [Processor Full Legal Name], a [State/Country] [Entity Type], with an address at [Address]

and

Merchant: [Merchant Full Legal Name], a [State/Country] [Entity Type], with an address at [Address]

Together, the parties are referred to as the “Parties.”

1. Merchant Information

Merchant legal name: [Full Legal Name]
Trade name, if any: [DBA Name]
Business address: [Address]
Website, if applicable: [Website]
Contact person: [Name and Title]

Type of business:

[Retail / E-commerce / Services / Subscription / Restaurant / Professional Services / Other]

2. Services Provided

Processor agrees to provide the following payment processing services to Merchant:

• authorization and routing of payment transactions;

• settlement or transmission of approved funds;

• access to gateway, terminal, or processing platform tools, if applicable;

• reporting, transaction records, or dashboard access;

• chargeback and retrieval handling support; and

• other agreed services: [Describe]

Accepted payment methods may include:

☐ Credit cards
☐ Debit cards
☐ ACH or bank transfer
☐ Digital wallet payments
☐ Recurring payments
☐ Other: [Describe]

3. Merchant Account and Underwriting

Merchant agrees to provide accurate business, ownership, banking, and operational information requested by Processor.

Processor may review, verify, and update Merchant’s application, processing profile, average ticket size, monthly volume, refund history, business model, and fraud or risk information.

Merchant shall promptly notify Processor of any material change in:

• ownership or control;

• products or services sold;

• processing volume or average transaction size;

• fulfillment timing;

• website or sales channel; or

• bank account information.

4. Transaction Processing Rules

Merchant may submit only lawful, authorized, and bona fide transactions arising from its actual business activities.

Merchant shall not submit:

• transactions that violate law or card network rules;

• transactions for prohibited goods or services;

• transactions known or suspected to be fraudulent;

• duplicate transactions; or

• transactions outside the approved business profile without Processor’s consent.

Merchant is responsible for obtaining customer authorization and maintaining transaction records as required.

5. Fees and Pricing

Merchant shall pay Processor the following fees:

Processing fee: [Percentage %] per transaction
Per-transaction fee: $[Amount]
Monthly service fee: $[Amount]
Gateway or platform fee: $[Amount]
Chargeback fee: $[Amount]
Retrieval request fee: $[Amount]
Batch fee, if any: $[Amount]
Other fee: [Describe]

Fees may be charged by:

☐ Deduction from settlement funds
☐ Direct debit from Merchant’s bank account
☐ Monthly invoice
☐ Another method: [Describe]

Any pricing schedule, interchange model, pass-through costs, or addendum is described here:

[Describe or attach schedule]

6. Settlement and Funding

Processor will transmit or make available approved settlement funds to Merchant according to the following schedule:

[Daily / next business day / rolling basis / weekly / other]

Settlement timing may be affected by weekends, holidays, network processing, fraud review, reserves, returned items, holds, or other delays reasonably related to risk or compliance.

Merchant must maintain the following settlement account:

Bank name: [Bank Name]
Account holder: [Name]
Routing and account details: [Insert or attach separately]

7. Chargebacks, Returns, and Adjustments

Merchant is responsible for chargebacks, retrieval requests, credits, returns, reversals, fines, and adjustments arising from Merchant’s transactions.

If a chargeback or dispute occurs, Processor may:

• deduct the amount from current or future settlements;

• debit Merchant’s bank account;

• require supporting documentation;

• impose applicable chargeback or dispute fees; and

• place a reserve or hold if risk increases.

Merchant agrees to respond to chargeback requests within the required timeframe and provide supporting records when requested.

8. Reserve and Security Interest

Processor may establish, increase, reduce, or maintain a reserve, holdback, rolling reserve, delayed funding arrangement, or other protective measure if reasonably necessary because of fraud risk, chargeback levels, financial condition, unusual processing activity, legal exposure, or anticipated losses.

Reserve terms, if agreed in advance, are as follows:

[Describe percentage, amount, release timing, or write “As determined under this Agreement”]

Merchant grants Processor a security interest, to the extent permitted by law, in settlement funds, reserves, and other amounts held under this Agreement to secure Merchant’s obligations.

9. Merchant Responsibilities and Compliance

Merchant agrees to:

• comply with applicable law, card network rules, and payment processing standards;

• maintain accurate transaction records;

• honor refund, return, and cancellation obligations applicable to its business;

• display customer service contact information where appropriate;

• protect account credentials and access tools; and

• cooperate with reasonable risk, fraud, and compliance reviews.

If PCI DSS or similar payment security compliance applies, Merchant shall complete and maintain required validation, certifications, scans, or security steps as applicable.

10. Data Security and Confidentiality

Each Party shall protect confidential business, customer, and payment-related information received under this Agreement using reasonable safeguards.

Merchant shall not store, transmit, or handle cardholder or account data except as permitted by applicable law, network rules, and Processor requirements.

If a data breach, security incident, or unauthorized access event affects processing activity or payment data, Merchant shall promptly notify Processor and cooperate in investigation, mitigation, and remediation as required.

11. Equipment, Software, and Access Tools

If Processor provides terminals, software, gateway access, APIs, virtual terminals, or related tools, Merchant may use them only for the purposes authorized under this Agreement.

Ownership of equipment or software is as follows:

☐ Processor retains ownership
☐ Merchant purchases equipment separately
☐ Other arrangement: [Describe]

Merchant shall not misuse, copy, tamper with, or allow unauthorized use of processing tools.

12. Prohibited Activity and Risk Monitoring

Processor may monitor Merchant’s activity for fraud, excessive chargebacks, prohibited transactions, unusual sales spikes, sanctions screening, legal compliance, or other risk factors.

Processor may suspend, delay, reject, or restrict processing if Processor reasonably believes:

• Merchant has breached this Agreement;

• fraud or unlawful activity may be occurring;

• material risk to Processor, a bank, or the payment network exists; or

• continued processing could violate law or network requirements.

13. Term and Renewal

This Agreement begins on [Effective Date] and continues until [End Date] unless earlier terminated under this Agreement.

Renewal terms:

☐ Automatic renewal for successive periods of [period] unless notice is given
☐ Month-to-month after the initial term
☐ Renewal only by written agreement
☐ No automatic renewal

14. Termination

Either Party may terminate this Agreement:

• by mutual written agreement;

• for material breach not cured within [Number] days after notice;

• if the other Party becomes insolvent or ceases operations, to the extent allowed by law; or

• for convenience upon [Number] days’ written notice, if permitted.

Processor may also suspend or terminate immediately for fraud risk, prohibited activity, unlawful conduct, repeated excessive chargebacks, false application information, or material compliance failure.

Any early termination fee or closeout charge is as follows:

[Describe or write “None”]

15. Liability and Indemnification

Merchant shall indemnify and hold Processor harmless from losses, claims, chargebacks, fines, penalties, costs, and liabilities arising from Merchant’s transactions, business conduct, breach of this Agreement, data incident caused by Merchant, or violation of law or network rules.

Processor shall be responsible for its own breach of this Agreement to the extent provided by applicable law.

To the extent allowed by law, neither Party shall be liable for indirect, incidental, special, or consequential damages except where such limitation is not enforceable or where fraud, willful misconduct, confidentiality breach, or similar excluded conduct applies.

16. Notices

Any notice under this Agreement must be in writing and sent to the contact information below or to updated information later provided in writing.

For Processor:
Name: [Name]
Address: [Address]
Email: [Email Address]

For Merchant:
Name: [Name]
Address: [Address]
Email: [Email Address]

Notice is effective upon:

☐ Personal delivery
☐ Confirmed email delivery
☐ Certified mail
☐ Recognized courier
☐ Other: [Describe]

17. Governing Law

This Agreement shall be governed by the laws of [State/Country], except to the extent mandatory banking, payments, consumer protection, or commercial law applies.

18. Entire Agreement

This Agreement contains the complete understanding between the Parties regarding merchant payment processing services and supersedes prior oral and written discussions on that subject.

Any amendment to this Agreement must be in writing and signed by the Parties, except for fee schedule or operational updates that this Agreement allows to be updated by notice.

19. Signatures

Processor:

Signature: __________________________
Name: [Full Name]
Title: [Title]
Date: [Date]

Merchant:

Signature: __________________________
Name: [Full Name]
Title: [Title]
Company: [Merchant Legal Name]
Date: [Date]

20. Optional Banking Authorization

Merchant authorizes Processor, if applicable, to debit and credit Merchant’s designated bank account for settlements, fees, chargebacks, returns, reserves, and other amounts due under this Agreement.

Authorized Signature: __________________________
Name: [Full Name]
Date: [Date]