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

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Program Materials

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.

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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
Ellen T. Berge

Partner
Venable

Ms. Berge focuses a substantial portion of her practice in the area of payment processing, working with both...  |  Read More

Andrew E. Bigart
Andrew E. Bigart

Counsel
Venable

Mr. Bigart's practice focuses on antitrust and consumer protection law, anti-money laundering and economic...  |  Read More

John Banghart
John Banghart

Senior Director for Technology Risk Management
Venable

Mr. Banghart has over two decades of federal government and private-sector experience in cybersecurity. He has...  |  Read More

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