A merchant agreement in a subscription-based business is a legal contract between the business and a payment processing provider, that outlines the terms and conditions of accepting electronic payments from customers. The agreement covers various aspects related to payment processing, such as fees, transaction processing, fraud management, chargeback management, and other related services. It also covers other important details, such as how refunds will be handled, how disputes will be resolved, and how the merchant account provider will ensure the security of customer data.
Additionally, the merchant agreement will often include specific rules and requirements related to the subscription-based business’s industry or business model.
Businesses using subscription management software rely on recurring payments from customers, and the merchant agreement plays a crucial role in ensuring that these payments are processed smoothly and securely. The agreement typically includes information about the types of payment methods that will be accepted, the fees associated with each payment method, and the schedule for payment processing.
The merchant agreement also sets out the roles and responsibilities of both parties, including the business using subscription billing software and the payment processing provider. The terms of a merchant agreement may vary depending on the type of subscription-based business and the payment processing provider. Therefore, it is important for subscription-based businesses to carefully review and understand the terms of their merchant agreement before signing up with a payment processing provider to ensure that they are comfortable with the fees, services, and responsibilities outlined in the agreement.
