Page 40 - GS171002

Education

merchants the flow of their funds, including date and amount of future Second, require the merchant to
disbursements. maintain an account with the proces-
• Communicate: Decode processing industry jargon and abbreviations. sor with a minimum threshold bal-
Provide a "dictionary" of terms to help merchants unravel the contract ance. The amount should be sufficient
and statements, and to make it easier for them to convey their concerns. to reimburse the processor for any
Listen attentively. Be sincere. Acknowledge their worries. Encourage potential disputed transactions. Most
feedback. Follow through with what you say you will do. Build trust. credit card companies allow their
consumers to dispute transactions for
Customer service is hard work, yet at the end of the day, a healthy business up to six months, sometimes longer.
relationship is necessary to maintain clients and increase your bottom line. Therefore, the processor might want
Processors take all the risks to unilaterally increase the minimum
threshold balance as he or she deems
The fact that processors take all the risks should cement your resolve to interact necessary.
with your merchants about the terms and conditions of your agreement. To
limit risk, a processor must have a clear contract with the merchant. Therefore, Third, the agreement should allow
it's recommended merchant agreements include the following: the processor to "set off" any disputed
1. Sufficient holdback period transaction from future transactions.
For example, the processor should be
2. Transaction, refund and chargeback fees entitled to retain $100 from one of the
3. Access to the merchant's bank account merchant's future transactions if a
consumer purchase services for $100
4. Extended holdback period following termination of merchant agreement and disputes the transaction after
5. Termination fee the processor has released the $100 to
the merchant. Likewise, the proces-
When negotiating the holdback period, keep in mind that if it's too long, the sor should have the ability to debit
merchant will not have sufficient cash flow to maintain a business. Therefore, the disputed amount from the mer-
consider negotiating lower transaction fees in exchange for a longer holdback chant's bank account.
period. Conversely, larger transaction fees can protect a processor with a short-
er holdback period. Should the agreement be terminat-
ed, the processor remains liable for
disputed transactions for at least six
months. Therefore, at a minimum, the
processor should be entitled to retain
all transacted funds until six months
after the last transaction. The final
layer of security is a termination fee
that will provide the processor funds
in the event of a shortfall for disputed
transactions.

Rather than fear the merchant will
be scared off by contract restric-
tions, by clearly identifying the fees
costs and terms of the agreement,
you will avoid potential lawsuits by
uninformed merchants. In the end,
the cost of a lawsuit will significantly
outweigh the loss of one merchant ac-
count. Merchants who better under-
stand their rights and obligations will
be satisfied, long-lasting customers.

Jake Greenberg is an attorney with Ehrenstein
Charbonneau Calderin in the firm's com-
mercial and business litigation practice in
Miami. He represents businesses, startup
companies and individuals in a variety of
complex commercial disputes. Contact him
at jmg@ecclegal.com or 305-722-2002. For
more information, visit www.ecclegal.com.
40