Use this free merchant agreement template when managing relationships between businesses and payment processing services.
Put simply, a merchant agreement outlines the terms and conditions between a business and a payment processing service.
It's a legally binding contract that details the responsibilities of each party, the fees involved and the rules for handling disputes.
This guide will provide you with an understanding of merchant agreement templates and how they simplify the process of drafting these important contracts.
A merchant agreement is a formal contract between a business (the merchant) and a payment processing service (the provider).
The agreement itself sets out the terms and conditions that the provider will process credit or debit card transactions for the merchant. In addition, it also outlines the fees the merchant will pay for this service, the procedures for handling disputes and chargebacks, and the circumstances under which the agreement can be terminated.
A merchant agreement works by clearly defining the roles and responsibilities of both the merchant and the payment processing service. It sets out the services the provider will offer, the fees the merchant will pay and the terms under which these services can be provided.
The agreement is usually established at the time the merchant decides to use the provider's services. The cost for these services is typically set at the time of the agreement, providing predictability in cost and scope for the merchant.
The main purpose of a merchant agreement (sometimes called a merchant services agreement) is to clearly define the terms and conditions of the payment processing service.
By providing a detailed description of what the provider will do for the merchant, the agreement manages expectations and boundaries.
When both parties work together effectively, they can achieve better results and stronger business relationships.
Several parties can be involved in the creation and management of a merchant agreement. Typically, these include:
Once the agreement has been standardized and approved, business owners and sales teams can use it without needing much help from the finance team.
A typical merchant agreement template includes the following:
Managing merchant agreements can become a daunting task. The traditional process usually involves several intricate steps that can be quite labor-intensive.
Firstly, each contract must be created individually. This means that for every new business relationship, a unique agreement must be drafted.
This is a meticulous process that requires a deep understanding of both the business's needs and the payment processing service's offerings. It's not just about copying and pasting terms and conditions; it's about tailoring each agreement to the specific relationship.
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Once the contract has been drafted, it needs to undergo an internal review. This step ensures that all the terms and conditions are accurate, fair and in the best interest of the business.
The review process often involves multiple departments, including legal, finance, and operations. Each team must scrutinize the agreement, which can be a lengthy process, especially if revisions are needed.
After the review, the contract must then receive the necessary approvals before it can be finalized.
Depending on the business's internal procedures, this could require sign-off from senior management or even the board of directors. The approval process makes sure that the business is protected and that the agreement aligns with its strategic objectives.
All these steps can be quite time-consuming, especially for businesses that handle a large volume of transactions. Each new merchant relationship means going through this process all over again, which can lead to significant delays and administrative backlog.This traditional approach, while thorough, can often be inefficient and cumbersome, particularly for businesses operating at a large scale.
Introducing a merchant agreement template can dramatically streamline this process. It removes the need to draft a new contract for every individual business relationship from scratch, thus accelerating the time to secure a commitment. The use of standardized terms within the template also reduces the likelihood of errors and inconsistencies.
You can also use an all-in-one contract management platform like Juro to automate your merchant agreements. This empowers your business to generate them quickly and efficiently, using AI to help you agree contracts 10x faster. Juro features include:
If you're on the hunt for a scalable solution to create, negotiate, sign and share merchant agreements, our team at Juro is here to help you discover the advantages of automating this process. Click below to learn more.
Juro is the #1-rated contract platform globally for speed of implementation.
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