Negotiating Payment Processing Agreements: Key Provisions for Retailers, Banks and Payment Processors

Recording of a 90-minute CLE webinar with Q&A


Conducted on Thursday, July 20, 2017
Recorded event now available


This CLE webinar will provide counsel with the tools to understand and negotiate payment processing agreements (PPAs). The panel will break down the many layers in accepting and processing payments from major card networks down through banks, third party payment processors, sales channels, and merchants, and provide an understanding of the roles and legal responsibilities of each party on issues relating to regulatory compliance, card network compliance, data security, confidentiality, exclusivity, indemnification ,fee structures, discount rates, interchange, and reserves. The panel will also discuss lessons from recent law enforcement cases that have resulted in losses for retailers, payment processors, or banks.

Description

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

The merchant is typically presented with a form PPA from its processors, but counsel should review and negotiate key provisions relating to compliance with industry standards, data security, confidentiality, use of third parties, reserves and more. Additional standards and guidelines are often incorporated by reference and should be part of the review.

Among other things, data security is a fundamental issue in PPAs, and a merchant’s obligations under PCI Data Security Standards or otherwise may vary depending on the size of its business and the payment types accepted. Contractual liabilities that flow from a data breach often exceed all other financial liabilities, including the cost to defend litigation or regulatory investigation. Target, Eddie Bauer, Intercontinental Hotels, Arby’s and Wendy's are recent examples of companies that have experienced data breaches relating to payment card accounts.

Listen as our authoritative panel discusses standard terms in PPAs, provisions that may be non-negotiable due to regulatory or network requirements, and the negotiating points that may mitigate the vendor’s potential liability. The panel will also discuss recent law enforcement actions related to payments issues and the lessons learned.

Outline

  1. Payment processing agreements: Understanding the parties and their roles
  2. Standard provisions: What you should expect to see in a PPA
  3. Issues for Review
    1. Regulatory Compliance
    2. Card Network Compliance
    3. Data security responsibilities
    4. Assignment rights; subcontractors
    5. Confidentiality
    6. Exclusivity
    7. Fee Structures (discount rates, interchange, reserves)
    8. Indemnity obligations
    9. Additional terms and conditions incorporated by reference
  4. Data protection: reviewing internal controls to ensure compliance with the PPA

Benefits

The panel will review these and other key issues:

  • What are the roles and responsibilities of the bank, card networks, payment processor, and merchant under a PPA?
  • Which provisions in standard form PPAs are problematic for vendors and which are negotiable?
  • What are the obligations of the parties with respect to data security under the PPA and how might the merchant limit its exposure?
  • What does the merchant need to understand about fee structures and financial liability under a PPA?

Faculty

Ellen T. Berge, Partner
Venable, Washington, D.C.

Ms. Berge focuses a substantial portion of her practice in the area of payment processing, working with both merchants and payments companies to address the legal, operational, and business challenges of transaction processing. She frequently instructs major international and domestic brand owners and start-up entrepreneurs on merchant processing agreements, payment structures for processing services, interchange and other pass-through fees, chargeback management, fraud prevention, and data security. She has also worked with large product companies to launch direct-to-consumer sales channels by advising on contractual arrangements with billing solution providers, gateways, processors, chargeback managers, and other companies in the chain of transaction processing.

Andrew E. Bigart, Counsel
Venable, Washington, D.C.

Mr. Bigart's practice focuses on antitrust and consumer protection law, anti-money laundering and economic sanctions, and business counseling. He works with clients in a variety of industries including financial service companies, broker-dealers, banks, multi-national corporations, healthcare providers, payment processors, nonprofit associations, and online marketers and advertisers. Antitrust. He has significant experience counseling clients on a variety of advertising, marketing, consumer protection, and general business issues, with a focus on financial institutions, financial services companies, and technology companies providing payment and related services. 

John Banghart, Senior Director for Technology Risk Management
Venable, Washington, D.C.

Mr. Banghart has over two decades of federal government and private-sector experience in cybersecurity. He has significant experience in risk management, government policy, standards and regulatory compliance, and incident management. He has successfully led efforts to address significant and high-profile cybersecurity issues within major government programs and institutions while facing complex legal, technical, and political circumstances. Prior to joining his Firm, he was the Senior Director for Trusted Engineering for Microsoft. From 2013 to 2015, he played a key role in developing the Obama Administration's cybersecurity and technology policy as the National Security Council's Director for Federal Cybersecurity.


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