Merchant services agreement definition: Everything you need to know
Processing payments for businesses is an integral part of any successful operation. Whether you are running an online store or a brick and mortar establishment, having a merchant services agreement in place is crucial. But what exactly is a merchant services agreement, and why is it so important? Let’s explore what it is and what it covers.
What is a Merchant Services Agreement?
A merchant service agreement (MSA) is a legally binding contract between a merchant account provider and a business owner. The MSA outlines the terms and conditions of processing electronic payments, including credit cards, debit cards, and other electronic forms of payment. The agreement ensures that the merchant receives the payment for transactions processed by the provider. The MSA also outlines the fees and charges associated with the processing of payments.
What Does a Merchant Services Agreement Cover?
A merchant services agreement covers a variety of topics, including payment processing, fees, and customer service. Here are the key areas that a typical MSA covers:
Payment Processing – The MSA outlines the types of payments that the merchant can accept, such as credit cards, debit cards, and electronic checks.
Fees – The MSA outlines the fees charged by the provider for processing payments. These fees include transaction fees, monthly fees, and chargeback fees.
Customer Service – The MSA outlines the level of customer service that the provider offers to merchants. This includes technical support, billing support, and customer service for customers who have issues with their payments.
Term – The MSA outlines the length of the agreement, which can range from a few months to several years.
Termination – The MSA outlines the process for terminating the agreement. This includes the notice period required for termination and any fees associated with early termination.
Liabilities – The MSA outlines the liabilities of the provider and the merchant. This includes any losses incurred due to fraudulent transactions, chargebacks, or other issues.
Why is a Merchant Services Agreement Important?
A merchant services agreement is important for both the merchant and the provider. It ensures that both parties are clear about the terms and conditions of processing payments. The MSA outlines the fees and charges associated with payment processing, which helps the merchant to plan their expenses and budget. It also outlines the level of customer service that the provider offers, which is important for resolving any issues that may arise.
The MSA also protects the provider and the merchant from liability. The agreement outlines the liabilities of both parties, which helps to prevent disputes and legal issues. For example, if a customer disputes a charge on their credit card statement, the MSA outlines the process for resolving the dispute and any associated fees.
In conclusion, a merchant services agreement is an essential document for any business that accepts electronic payments. The agreement outlines the terms and conditions of processing payments, fees, customer service, liabilities, and termination. It helps to ensure that both the merchant and the provider are clear about the terms of their agreement and protects them from liability. If you are looking for a merchant account provider, be sure to carefully review the MSA to ensure that it meets your needs.