Merchant Services Agreement for Sub-Merchants

 NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises contained herein, the parties agree as follows:

1. Certain Sub–merchant Responsibilities.  Sub-merchant agrees to comply, and to cause third parties acting as Sub–merchant’s agent (“Agents”) to comply, with the Association’s and other payment network’s by–laws, operating regulations and/or all other rules, policies and procedures, including but not limited to the Payment Card Industry Data Security Standard, the VISA Cardholder Information Security Program, the Mastercard Site Data Protection Program, and any other program or requirement that may be published and/or mandated by the Associations or payment networks (collectively “Operating Regulations“). Sub-merchant may review the VISA, Mastercard, and Discover websites for a copy of the Visa, Mastercard and Discover regulations.  The websites are: https://usa.visa.com/support/small– business/regulations–fees.html and http://www.mastercard.com/us/merchant/ and http://www.discovernetwork.com/merchants/.   Sub– merchant also agrees to comply with all applicable state, federal, and local laws, rules, and regulations (“Laws”). Without limiting the foregoing, Sub–merchant agrees that it will fully comply with any and all anti–money laundering laws and regulations, including but not limited to the USA PATRIOT Act, the Bank Secrecy Act, the Federal Trade Commission and obligations imposed by the US Treasury’s Office of Foreign Assets Control (OFAC).  For purposes of this section, Agents include, but are not limited to, Sub–merchant’s software providers and/or equipment providers.

If appropriately indicated in Sub–merchant’s agreement with Provider, Sub–merchant may be a limited–acceptance merchant, which means that Sub–merchant has elected to accept only certain Visa and Mastercard card types (i.e., consumer credit, consumer debit, and commercial cards) and Sub-merchant must display appropriate signage to indicate the same.  Acquirer has no obligation other than those expressly provided under the Operating Regulations and applicable law as they may relate to limited acceptance. Sub–merchant, and not Acquirer, will be solely responsible for the implementation of its decision for limited acceptance, including but not limited to policing th e card type(s) accepted at the point of sale.

Sub–merchant shall only complete sales transactions produced as the direct result of bona fide sale made by Sub–merchant to cardholders, and is expressly prohibited from presenting sales transactions which are produced as a result of sales made by any person or entity other than Sub–merchant, or for any purposes related to any illegal or prohibited activity, including but not limited to money–laundering or financing of terrorist activities.

Sub–merchant may set a minimum transaction amount to accept a card that provides access to a credit account, under the following conditions: i) the minimum transaction amount does not differentiate between card issuers; ii) the minimum transaction amount does not differentiate between Mastercard, Visa, or any other acceptance brand; and iii) the minimum transaction amount does not exceed ten dollars (or any higher amount established by the Federal Reserve).  Sub–merchant may set a maximum transaction amount to accept a card that provides access to a credit account, under the following conditions: Sub–merchant is a i) department, agency or instrumentality of the U.S. government; ii) corporation owned or controlled by the U.S. government; or iii) Sub–merchant whose primary business is reflected by one of the following MCCs: 8220, 8244, 8249 – Schools, Trade or Vocational; and the maximum transaction amount does not differentiate between Mastercard, Visa, or any other acceptance brand.

2. Sub–merchant Prohibitions.  Sub-merchant must not i) 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 ; ii) add any tax to transactions, unless applicable law expressly requires that a Sub–merchant impose a tax (Any tax amount, if allowed, must be included in the transaction amount and not collected separately); iii) request or use an account number for any purpose other than as payment for its goods or services; iv) disburse funds in the form of travelers checks if the sole purpose is to allow the cardholder to make a cash purchase of goods or services from Sub–merchant; v) disburse funds in the form of cash unless Sub–merchant is dispensing funds in the form of travelers checks, TravelMoney cards, or foreign currency (in such case, the transaction amount is limited to the value of the travelers checks, TravelMoney cards, or foreign currency, plus any commission or fee charged by the Sub–merchant), or Sub-merchant is participating in a cash back service; vi) submit any transaction receipt for a transaction that was previously charged back to the Acquirer and subsequently returned to Sub–merchant, irrespective of cardholder approval; vii) accept a Visa consumer credit card or commercial Visa product issued by a U.S. issuer to collect or refinance an existing debt; viii) accept a card to collect or refinance an existing debt that has been deemed uncollectable; or ix) submit a transaction that represents collection of a dishonored check. Sub–merchant further agrees that, under no circumstance, will Sub-merchant store cardholder data in violation of the Laws or the Operating Regulations including but not limited to the storage of track-2 data. Neither Sub–merchant nor its Agent shall retain or store magnetic–stripe data subsequent to the authorization of a sales transaction.

3. Settlement.  Upon receipt of Sub–merchant’s sales data for card transactions, Acquirer will process Sub–merchant’s sales data to facilitate the funds transfer between the various Associations and Sub–merchant.  After Acquirer receives credit for such sales data, subject to the terms set forth herein, Acquirer will fund Sub–merchant, either directly to the Sub–merchant–Owned Designated Account or through Provider to an account designated by Provider (“Provider Designated Account”), at Acquirer’s discretion, for such card transactions.  Sub–merchant agrees that the deposit of funds to the Provider Designated Account shall discharge Acquirer of its settlement obligation to Sub–merchant, and that any dispute regarding the receipt or amount of settlement shall be between Provider and Sub–merchant. Acquirer will debit the Provider Designated Account for funds owed to Acquirer as a result of the Services provided hereunder, provided that Acquirer may also debit Sub–merchant’s designated demand deposit account (“Sub–merchant–Owned Designated Account”) upon receipt of such account information from Sub–merchant or Provider, or if Acquirer deposits settlement funds into the Sub–merchant–Owned Designated Account. Further, if a cardholder disputes a transaction, if a transaction is charged back for any reason, or if Acquirer reasonably believes a transaction is unauthorized or otherwise unacceptable, the amount of such transaction may be charged back and debited from Sub–merchant or Provider.