Acquiring Programs

Each Customer and each Service Provider that performs Program Service with respect to that Customer’s acquiring Programs must comply with all of the following.

7.6.1 Merchant Agreement

The Merchant Agreement establishing the terms of an acquiring relationship between the Acquirer and a Merchant must:

1. Be signed by the Customer with no separate or other agreement between the Service Provider and the Merchant regarding Activity. The Service Provider may be a party to the Merchant Agreement, in which case the Merchant Agreement must contain the substance of all of the following:

a. For purposes of the Merchant Agreement and performance of the Merchant

Agreement by the Service Provider, (i) the Service Provider is the exclusive agent of the Customer; (ii) the Customer is entirely responsible for, and in control of, Service Provider performance; and (iii) the Customer must approve, in advance, any fee payable to or obligation of the Merchant arising from or related to performance of the Merchant Agreement.

b. The Merchant Agreement is not effective and may not be modified in any respect without the express written agreement of the Customer.

c. The Service Provider may not have access, directly or indirectly, to any account for funds or funds due to a Merchant and/or funds withheld from a Merchant for

chargebacks arising from, or related to, performance of this Merchant Agreement. The Customer may not assign or otherwise transfer an obligation to pay or reimburse a Merchant arising from, or related to, performance of the Merchant Agreement to a Service Provider.

d. The Service Provider may not subcontract, sublicense, assign, license, franchise, or in any manner extend or transfer to any third party, any right or obligation of the Service Provider set forth in the Merchant Agreement. The Customer may not waive, forgive, release, assign, or fail to insist on strict performance of each requirement set forth in these parts 1 through 4.

2. Confirm the Customer’s responsibility for the Program and for the Merchant’s Program participation and confirm that the Merchant Agreement does not contain any provision that could be deemed to limit such responsibility.

3. Not take effect or state or imply that it takes or has taken effect prior to being signed by the Customer.

4. Disclose the Customer’s name and sufficient information to enable the Merchant to contact the Customer directly by telephone or in writing.

7.6.2 Collection of Funds from a Merchant

Discount rates (or similar charges called by other terms) due to a Customer from a Merchant must be collected directly by the Customer and not by the Service Provider.

7.6.3 Access to Documentation

The Customer at all times must maintain prompt and unrestricted physical access to all original, executed Merchant Agreements and ATM Owner Agreements and to completed

Merchant and ATM site inspection reports. The Customer must forward true and complete copies of any one or more of these documents to the Corporation promptly upon request.

7.6.4 Authority to Terminate Merchant Agreement or ATM Owner Agreement

A Customer may not limit or in any manner condition its authority to terminate any Merchant Agreement or ATM Owner Agreement to accommodate a Service Provider or otherwise.

7.6.5 Payment Facilitators and Submerchants

The Acquirer is responsible for all acts and omissions of a Payment Facilitator and of any Submerchant.

A Payment Facilitator may not be a Submerchant of any other Payment Facilitator, nor may a Payment Facilitator be a Payment Facilitator for another Payment Facilitator.

Unless otherwise approved by the Corporation, any Submerchant that exceeds USD 1,000,000 in MasterCard and Maestro combined annual Transaction volume must enter into a Merchant Agreement directly with a Customer.

7.6.5.1 Responsibility for Payment Facilitator and Submerchant Activity The Acquirer is responsible for the Activity of the Payment Facilitator and each of its Submerchants. The Acquirer must ensure ongoing compliance with all of the following. 1. A Submerchant must be located within the Acquirer’s Area of Use as described in Rule 1.7,

“Area of Use.” The Acquirer must obtain an extension of its Area of Use if the

Submerchant is located elsewhere, except as provided in Rule 1.7.2, “Extension of Area of Use Exceptions,” paragraphs 5, 6, 7, and 8. The location of the Submerchant determines the location of a Transaction, not the location of the Payment Facilitator. A Payment Facilitator may be located outside of the Acquirer’s Area of Use.

2. Settlement funds the Acquirer permits a Payment Facilitator to access may only be used to pay Submerchants pursuant to the terms of their Submerchant Agreements.

3. An Acquirer may permit a Payment Facilitator to manage the following obligations on behalf of the Acquirer, and remains fully responsible for the fulfillment of each to the extent that the Payment Facilitator fails to do so:

a. Verify that a Submerchant is a bona fide business operation, as set forth in section 7.1.2, “Submerchant Screening Procedures” in Chapter 7 of the Security Rules and Procedures manual; and

b. Retain records concerning the investigation of a prospective Submerchant, provided that such records are provided to the Acquirer immediately upon request; and c. Pay a Submerchant for Transactions, in accordance with Rule 7.8.2, “Obligations as

Sponsor of Submerchants,” part 4; and

d. Ensure that a Submerchant is supplied with materials necessary to effect Transactions as set forth in Rule 7.8.2, “Obligations as Sponsor of Submerchants,” part 5; and e. Monitor a Submerchant’s Activity on an ongoing basis to deter fraud or other

wrongful activity, as set forth in Rule 7.8.2, part 6.

4. Neither the Payment Facilitator nor the Submerchant may require a Cardholder to waive a right to dispute a Transaction.

5. The Acquirer must provide to the Corporation a quarterly Activity report for each Submerchant of the Payment Facilitator that includes:

a. Submerchant name and location as appears in DE 43 (Card Acceptor Name/Location) of clearing records

b. Submerchant “doing business as” name or URL c. Submerchant MCCs

d. Transaction sales count and amount for each MCC e. Transaction chargeback count and amount for each MCC

Provided the Acquirer is compliant with parts 6 and 7 set forth immediately below, and unless otherwise required by the Corporation, the requirements set forth in this part 5 are not applicable to Processed Transactions.

6. An Acquirer that uses a Payment Facilitator must populate the Payment Facilitator field with a Payment Facilitator (PF) ID in all Transaction messages as follows. The PF ID must match the Company ID provided during Payment Facilitator registration or will be provided directly by the Corporation.

a. DE 48 (Additional Data—Private Use), subelement 37 (Additional Merchant Data), subfield 1 (Payment Facilitator ID) of Authorization Request/0100 and Financial Transaction Request/0200 messages; and

b. PDS 0208 (Additional Merchant Data), subfield 1 (Payment Facilitator ID) of First Presentment/1240 messages.

7. An Acquirer that uses a Payment Facilitator must populate the Submerchant field with a Submerchant ID in all Transaction messages as follows. The Submerchant ID must match the Submerchant ID supplied by the Acquirer or Payment Facilitator.

a. DE 48 (Additional Data—Private Use), subelement 37 (Additional Merchant Data), subfield 3 (Submerchant ID) of Authorization Request/0100 and Financial Transaction Request/0200 messages; and

b. PDS 0208 (Additional Merchant Data), subfield 2 (Submerchant ID) of First Presentment/1240 messages.

7.6.6 High-Risk Payment Facilitators

A Payment Facilitator that proposes to sponsor as Submerchants one or more entities conducting business that may be described under any one of the following MCCs or any entity that, as a Merchant, was reported under the Excessive Chargeback Program is deemed by the Corporation to be a “High-Risk Payment Facilitator.”

• Non–face-to-face adult content and services Merchants—MCCs 5967 and 7841 • Non–face-to-face gambling Merchants—MCC 7995

• Non–face-to-face pharmaceutical Merchants—MCC 5122 and MCC 5912 • Non–face-to-face tobacco product Merchants—MCC 5993

• High-risk cyberlocker Merchants—MCC 4816 (registration required effective 15 September 2015)

The Acquirer must register each such entity in the MasterCard Registration Program (MRP) system via MasterCard Connect™ before accepting Transactions arising from such entity, whether directly or through a Payment Facilitator, as described in Chapter 9 of the Security Rules and Procedures manual.

The Corporation, in its sole discretion, may de-register a Payment Facilitator if it or any of its Submerchants is identified as generating excessive chargebacks or fraudulent activity or of violating any Standard or applicable law. The Corporation reserves the right to de-register a Payment Facilitator or Submerchant that in the opinion of the Corporation, participates in any activity that may cause damage to the Corporation.

The Corporation reserves the right to require an Acquirer to provide a monthly Processed Transaction Activity report that includes all of the information listed in Rule 7.6.5.1,

“Responsibility for Payment Facilitator and Submerchant Activity,” part 5 for any Submerchant of a High-Risk Payment Facilitator.

The Merchant monitoring requirements set forth in Chapter 9 of the Security Rules and Procedures manual apply to Submerchants of High-Risk Payment Facilitators.

NOTE: Modifications to this Rule appear in the “United States Region” chapter.