Use this free merchant agreement template when managing relationships between businesses and payment processing services.
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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.
A merchant agreement is a contract between a business that accepts card payments and the company that processes those payments for it. It sets out the fees the business pays and how chargebacks and disputes are handled, along with the situations in which either side can end the agreement.
Usually, yes, though it may not look like one. Payment services that let small businesses accept cards straight away ask you to accept their standard terms online, and those terms are your merchant agreement. Read them for fees and for the provider's right to hold back funds, because those terms cause small businesses the most trouble.
A service agreement can cover almost any kind of service. A merchant agreement is specific to card payments, so it deals with issues a general service contract usually leaves out, such as chargebacks and the card networks' rules. Because the provider relies on banks and card networks outside the contract, a merchant agreement usually brings their rules in by reference.
Providers usually ask for the right to recover chargebacks and related fees from the merchant, and to hold back a reserve from the merchant's funds if the risk of chargebacks rises. Merchants push back hardest on reserves, so state clearly what triggers a reserve and when the money is released. Clear limits make the agreement easier to sign without weakening your protection.
Yes, and many do, especially where the provider has offered lower rates in return for a fixed term. Merchants often dispute these fees when they switch providers, so explain how the fee is calculated and make sure the merchant sees it before signing. Some providers also charge for equipment that isn't returned, which belongs in the same section.
It's a sound starting point, but you'll need to check it against your bank and card network requirements and tailor the fee schedule to each merchant. For specific legal advice on your contract templates, consult an attorney.
Build the template in Juro once and generate each merchant agreement from it, with sales filling in the merchant's details and pricing for every new account. When your fees or chargeback terms change, you update that one template and every new agreement uses the new version. Signed agreements are kept in one searchable place, so you can look up a merchant's rates or term end date in seconds.
Yes. If you already have merchant agreements, Operator, the AI drafting feature in Juro, can turn them into a new template that keeps your drafting style and the positions you usually take on fees and liability. Your legal team approves the first draft before anyone uses it, so the template reflects your risk appetite.
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