fees can protect a processor with a shorter
holdback period.
Second, require the merchant to
maintain an account with the processor
with a minimum threshold balance.
The amount should be sufficient to
reimburse the processor for any potential
disputed transactions. Most credit
card companies allow their consumers
to dispute transactions for up to six
months, sometimes longer. Therefore,
the processor might want to unilaterally
increase the minimum threshold balance
as he or she deems necessary.
Third, the agreement should allow
the processor to "set off" any disputed
transaction from future transactions. For
to retain $100 from one of the merchant's
future transactions if a consumer
purchase services for $100 and disputes
the transaction after the processor has
released the $100 to the merchant.
Likewise, the processor should have the
ability to debit the disputed amount from
the merchant's bank account.
Should the agreement be terminated,
the processor remains liable for disputed
transactions for at least six months.
Therefore, at a minimum, the processor
should be entitled to retain all transacted
funds until six months after the last
transaction. The final layer of security
is a termination fee that will provide the
processor funds in the event of a shortfall
for disputed transactions.
be scared off by contract restrictions,
by clearly identifying the fees costs,
and terms of the agreement, you will
avoid potential lawsuits by uninformed
merchants. In the end, the cost of a
lawsuit will significantly outweigh the
loss of one merchant account. Merchants
who better understand their rights and
obligations will be satisfied, long-lasting
customers.
October 23, 2017 Issue 17:10:02 of The
Green Sheet, a semimonthly magazine
that provides in-depth coverage of the
credit card processing industry.