Merchant Agreement: Definition & Sample

A merchant agreement is a legal agreement typically between a financial institution and the company, or merchant, for whom they will be providing services. These services are usually payment processing and financial services for businesses. A merchant agreement outlines the terms and conditions of the services being provided and governs the business relationship between the two parties.

Merchant agreements can include things like fees and payment terms, fraud management, and risk monitoring clauses. These agreements can be used with business relationships concerning brick and mortar stores as well as e-commerce businesses.

Common Sections in Merchant Agreements

Below is a list of common sections included in Merchant Agreements. These sections are linked to the below sample agreement for you to explore.

Merchant Agreement Sample

CONFIDENTIAL TREATMENT REQUESTED UNDER RULE 406 UNDER THE SECURITIES ACT OF 1933, AS AMENDED. [*****] INDICATES OMITTED MATERIAL THAT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST FILED SEPARATELY WITH THE COMMISSION. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE COMMISSION.

Payment Services Provider Agreement

This Payment Services Provider Agreement ( “Agreement” ) is entered into as of July 22 , 2013 (the “Effective Date” ) between Stripe, Inc., a Delaware corporation with offices at 3180 18 th Street, Suite 100, San Francisco CA 94110 ( “Stripe” ) and Shopify Payments (USA) Inc., a Delaware corporation with offices at c/o CT Corporation, Corporation Trust Centre, 1209 Orange Street, Wilmington Delaware 19801 USA ( “Shopify USA” ). Stripe and Shopify USA may be collectively referred to herein as the “ Parties ” and each as a “ Party ”.

A. Stripe provides payment processing services to software developers and other third parties for financial transaction processing of credit cards, debit cards, and other Payment Devices, including such cards that are issued for acceptance on the payment networks operated by Visa, Inc. ( “Visa” ), MasterCard International Incorporated ( “MasterCard” ), American Express ( “Amex”) and other Payment Network operators (Stripe’s payment processing services collectively referred to herein as the “Stripe Services” );

B. Shopify Inc. (as further defined below, “ Shopify ”), the parent company of Shopify USA, is a provider of various commerce services to third-party merchants pursuant to an agreement with each of them;

C. Under the terms of the Services Agreement dated April 16 2012, between Stripe and Shopify (the “Original Platform Agreement” ), Stripe provides the Stripe Services to certain third-party merchant customers of Shopify ( “Old Portfolio Merchants” ); and

D. Shopify USA desires to become a registered payment service provider of Wells Fargo Bank, N.A. (the “Bank” ) pursuant to which it will provide financial processing products and services of Stripe and the Bank (such services being “Shopify Payments” ) to Shopify Merchants in the Territory (as such terms is defined blow);

The Parties hereby agree as follows:

1. Definitions . Capitalized terms used in this Agreement and not otherwise defined in context are defined in Exhibit A attached hereto.

2. Scope of Agreement . Subject to the terms and conditions of this Agreement:

a. Development and Implementation of the Services.

i. Subject to Section 3 and in accordance with the phased timeline described in Exhibit B , the Parties will collaborate to make available Shopify Payments to Shopify Merchants and third-party merchant applicants.

b. Transaction Processing.

i. Shopify USA hereby appoints Stripe to provide the Stripe Services with respect for those Shopify Merchants that elect to procure Shopify Payments pursuant to a Merchant Agreement (as defined below) (such a Shopify Merchant being a “Shopify Payments Merchant” );

ii. Stripe accepts such appointment and, commencing on the Launch Date, will provide the Stripe Services to Shopify Payments Merchants throughout the Term of this Agreement in the Territory.

iii. As and from the Launch Date, Stripe will provide the Stripe Services for card-not-present Shopify Payments Merchant transactions ( “CNP Transactions” ) submitted over the internet; the Parties shall collaborate to develop and implement card-present merchant transaction ( “CP Transaction” ) processing services at point-of-sale Shopify Payments Merchant locations in accordance with Section 6(b) for activation as soon as reasonably practicable. The date upon which the Parties first make Stripe Services generally available for card-present transactions shall be mutually agreed upon (the “CP Date” ). In addition, the Parties shall collaborate to integrate Shopify Billing payment processing into Shopify Payments in accordance with Section 6(c ).

c. Territory; International Expansion. As of the Launch Date, Stripe will make the Stripe Services available to Shopify Payments Merchant who conduct business in the Territory in U.S. Dollar transactions. As and when Stripe is able to provide Stripe Services for merchants outside of the United States or in currencies other than U.S. Dollars, Stripe shall offer such services to Shopify USA, Shopify and its affiliates under an additional agreement similar to this Agreement to be negotiated and agreed upon in each of those additional jurisdictions (each such agreement being a “Foreign Processing Agreement” ). For example, but without limitation, those Old Portfolio Merchants that are located in Canada will be eligible to be offered Canadian Dollar Stripe Services in Canada when Stripe and Shopify enter into a Foreign Processing Agreement in respect of Canada.

3. Shopify Payments Implementation Phase

a. Parties’ Continued Performance of Existing Platform Services Agreement. Until the Launch Date with regard to Old Portfolio Merchants’ payment processing activity in the United States, (i) Stripe will continue to perform its obligations under the Original Platform Agreement, and (ii) Shopify

USA shall not interfere with the continued performance by Shopify under the Original Platform Agreement. In addition, Stripe will continue to perform its obligations under the Original Platform Agreement outside the United States, until such time as is otherwise agreed between Shopify and Stripe. At any moment in time a given Shopify Merchant that is processing through Stripe will be doing so as a result of only one of the following, but not more than one: (i) the Old Platform Agreement; (ii) this Agreement, as a Shopify Payments Merchant; or (iii) pursuant to a Foreign Processing Agreement. The responsibility for services, fees payable between parties hereto and applicable technical specifications for each of the foregoing scenarios shall be derived from the Old Platform Agreement, this Agreement or the Foreign Processing Agreement, as the case may be. Shopify USA may, at its discretion, but in coordination with Stripe as provided for below, solicit or require Old Portfolio Merchants to enter into Merchant Agreements in substitution of their existing merchant agreements established under the Old Platform Agreement (each an “Old Merchant Agreement” ) (such substitution being a “Migration” to Shopify Payments). As and when Foreign Processing Agreements are entered into, Shopify or its affiliates shall, similarly, have the right to cause merchants procuring Stripe Services under the Old Platform Agreement, in jurisdictions outside of the U.S., to Migrate to Shopify Payments (i.e. not the U.S. version) available as a result of the applicable Foreign Processing Agreement. The parties shall, prior to August 1, 2013, establish a procedure by which such Migrations will take place that will be seamless from the perspective of the Shopify Merchant, which procedures shall foresee such Migrations not only in the U.S. but elsewhere as well.

i. Treatment of Old Portfolio Merchants on Shopify Platform. The Parties shall mutually agree on a procedure and timeline for the Migration of Old Portfolio Merchants to Shopify Payments. Shopify USA shall cause Shopify to agree to terms for such Migration to Shopify Payments procedures that are acceptable to Shopify USA. The Parties shall ensure that all transaction data generated by an Old Portfolio Merchant prior to the effective date of a Migration to Shopify Payments is preserved and continues to be accessible to such merchants when using Shopify Payments. Subject to Applicable Law, the Parties shall mutually agree on a procedure for transfer of/assignment or novation of existing Old Merchant Agreements between each Old Portfolio Merchant and Stripe under the Original Platform Agreement to the Merchant Agreement in order to give legal effect to the Migration to Shopify Payments. The parties expect Migrations to be ongoing in light of the fact that in each jurisdiction where a Foreign Processing Agreement is adopted they expect there to be Shopify Merchants using Stripe Payments under the Old Program Agreement prior to the effective date of the Foreign Processing Agreement.

ii. Change in Settlement Flows. In accordance with Applicable Law, Payment Network rules and the applicable payment service provider agreements, the Parties shall cooperate to effect any necessary changes to merchant settlement flows as of the Launch Date to ensure proper settlement and assessment of Shopify Payments fees for all transactions conducted under Shopify Payments, and termination of settlement flows to merchant settlement accounts such as they were under the Old Program Agreement merchant agreement for the merchant.

b. Shopify Registration as Compliant Service Provider. In order to provide Shopify Payments to Shopify Merchants, Shopify USA shall make commercially reasonable efforts to register with the applicable Payment Networks as a Compliant Service Provider to Wells Fargo Merchant Services Inc. ( “WFMS” ) no later than the Launch Date set forth in Section 4(b) . Stripe will make commercially reasonable efforts to assist and cause Bank to assist Shopify USA to obtain such registration. Stripe shall similarly assist and cause the applicable foreign bank to assist Shopify in obtaining the applicable registrations in each Foreign Processing Agreement jurisdictions, such as they may be from time to time.

c. Development and Testing of Shopify Payments. Shopify USA will develop Shopify Payments with technical assistance from Stripe. Shopify USA will test the Shopify Payments platform to the Parties’ mutual satisfaction in accordance with the timeline set forth in Section 4(b) . As additional functionality is developed and tested, the Parties will cooperate to incorporate such functionality into the existing services provided or available to Shopify Merchants.

d. Merchant Account Application Interface (Dual Account Application). As further set forth in Schedule 3(d) , Shopify USA shall incorporate a web-based interface (the “Merchant Account Application Interface” ) into Shopify Payments that permits a merchant to apply for both a Shopify Payments account, subject to a Merchant Agreement (as defined below) and a Stripe Account. As between the Parties, Stripe will assume exclusive responsibility for the Stripe Account and shall indemnify and hold Shopify USA and its affiliates from any and all claims, liabilities or other losses arising from or related to any Stripe Account. Until otherwise provided for herein, the Stripe Account shall remain inactive and no products or services shall be provided to the Shopify Merchants through such account. Shopify Services are provided pursuant to the Shopify Merchant Agreement entered into by all Shopify Merchants prior to or concurrently with being solicited for Shopify Payments. Nothing in this Agreement shall be construed to require either party to transfer any information to the other party to the extent that it cannot do so without violating Applicable Law. Shopify USA will develop and test the Merchant Account Application Interface to the Parties’ mutual satisfaction in cooperation with Stripe, and in accordance with the timetable set forth in Section 4(b) . The Merchant Account

Application Interface shall collect and transmit sufficient data from each merchant applicant to permit Stripe to perform its underwriting and risk evaluation obligations under Section 5(a ). In addition, for merchants approved by Stripe ( “Approved Shopify Merchants” ), the Merchant Account Application Interface shall, by default, offer to merchant the ability to simultaneously create both a Shopify Payments Account and a Stripe Account in accordance with Section 5(b) . However, at the discretion of Shopify USA or the merchant, the Merchant Account Application Interface may also enable a Shopify Merchant to procure one, all or a combination of the following: (i) Shopify Payments; (ii) a Shopify or Shopify USA-enabled third party payment service from PayPal or Google Wallet; (iii) other non-payment products and services of Shopify USA or third parties; (iv) continue using a third party payment service; or (v) a new third party payment service that is not, as of the submission thereof, available through the Stripe Services. New Shopify Merchants that, prior to becoming such, had a payment processor that they wish to continue using in conjunction with the Shopify Services, or that wish to cease using Shopify Payments but not Shopify Services, shall not be required to procure Shopify Payments or the Stripe Services or any other payment service.

e. Development and Approval of Four-Party Shopify Payments Merchant Agreement. The provision of Shopify Payments to a given merchant shall be conditional upon such merchant becoming a party to a four-party merchant agreement substantively in the form set out in Schedule 3.e hereto (the “Merchant Agreement” ). The form of Merchant Agreement shall not be changed without the prior consent of Shopify USA, Stripe, and the Bank. Under the Merchant Agreement, Shopify USA, Stripe and the Bank will be responsible to merchant to provide payment services, including the Stripe Services, and Stripe will contract with the merchant as Shopify USA’s agent to deliver the Stripe Services on Shopify USA’s behalf, including obtaining all merchant approvals required to complete payment transactions. As between the parties hereto, however, except as set out herein, Stripe shall bear exclusive responsibility for the supply of Stripe Services to Shopify Payments Merchants under Merchant Agreements.

f. Third-Party Approvals. The Parties acknowledge that the form of this Agreement, the performance of the Stripe Services, the operation of Shopify Payments, and the form of the Merchant Agreement are subject to the ongoing approval of the following entities, as well as subject to the terms of the applicable agreements with such parties (“ Third Party Terms ”):

ii. Wells Fargo Bank, N.A.; and

iii. the applicable rules and regulations of Payment Networks.

Stripe represents to Shopify USA that this Agreement is consistent with all Third Party Terms. In the event that Shopify USA is in breach of any Third Party Terms, without limitation to other rights of Shopify USA hereunder, Stripe shall provide Shopify USA notice of the breach together with a copy of the clause that Shopify USA is alleged to have breached. Shopify USA will then have thirty (30) days from such notice to cure the breach before it shall be deemed to be in default hereunder. Notwithstanding the foregoing, nothing in this Agreement shall be construed to require Stripe to continue providing services to Shopify USA under this Agreement to the extent that doing so would violate its contract with the Bank or other Third Party Terms. In the event that Stripe is required to cease providing services hereunder on account of Bank or other Third Party Terms, it shall afford Shopify USA such time and reasonable assistance to wind-down its operations hereunder as such third party requirements will permit.

To the extent that Third Party Terms, not expressly foreseen in this Agreement, cause a material adverse effect on Shopify USA or have the effect of undoing the essential commercial bargain of this Agreement, then either party shall have the right to terminate this Agreement on ninety (90) days notice to the other party without penalty or recourse and Shopify USA shall be afforded such time and reasonable assistance to wind-down its operations hereunder as such third party requirements will permit.

4. Transition From Stripe Payment Platform to Shopify Payments . The Parties shall cooperate to transition from the Stripe Payment Platform as set forth in the Original Platform Agreement to Shopify Payments in accordance with this Section 4 as the default method of providing Stripe Payments to Shopify Merchants.

a. Shopify Payments Deployment Terms and Acceptance Criteria. Subject to the Third Party Terms, the Parties shall mutually agree on the criteria for testing, acceptance, and final deployment of Shopify Payments, and agree to make commercially reasonable efforts to complete testing and acceptance thereof in accordance with Section 4(b) .

b. Timetable. The Parties shall make commercially reasonable efforts to complete development and testing of Shopify Payments and obtain all necessary third-party approvals no later than August 1, 2013. The Parties shall launch Shopify Payments within thirty (30) days after (i) the Parties mutually agree that the tasks set forth in Section 3 have been completed, and (ii) each Party certifies to the other Party in writing that it has received all of the third-party approvals required under Section 3(f) (the “Launch Date” ).

c. Default Position; Marketing Commitment. Throughout the Term, subject to Section 3(d) hereof, (i) Shopify Payments powered by Stripe will be the primary credit and debit card payment processor that Shopify USA or its affiliates

presents, markets or promotes to Shopify Merchants in the Territory, and (ii) Stripe will be the only credit or debit card processing service used by Shopify or its affiliates to deliver Shopify Payments. For greater certainty, Shopify may make other credit or debit card payment processing services or other payment services available to Shopify Merchants to accommodate such Shopify Merchants pre-existing relationships with other payment providers, or service Shopify Merchants that elect to not use Shopify Payments, but will not encourage or promote the use of such alternative payment services. Shopify USA shall market and promote Shopify Payments to all Shopify Merchants in the Territory in order to encourage them to utilize Shopify Payments. Stripe shall promote the Shopify Services to its customers in the Territory by providing a preferred listing in Stripe’s partner page or similar preferential placement on Stripe’s website.

d. Non-Solicitation. For the Term hereof and for one (1) year thereafter (the “ Non-Solicitation Period ”):

(i) None of Stripe or any of its affiliates shall, directly or indirectly themselves or authorize any third party to, solicit Shopify Merchants to: (A) terminate a Shopify Merchant Agreement; or (B) terminate a Merchant Agreement. In addition, none of Stripe or any of its affiliates shall, directly or indirectly themselves or authorize any third party to utilize the identity of Shopify Payments Merchants, or other information in respect thereof, learned by Stripe through the provision of the Stripe Services under this Agreement ( “Shopify Merchant List” ) to solicit such Shopify Payments Merchants to procure credit or debit card processing services other than Shopify Payments. Stripe shall not be in breach of the foregoing in the event that a Shopify Merchant responds to a general advertisement by Stripe that was published without making use of any the Shopify Merchant List or other information obtained through this Agreement, a Merchant Agreement or on account of Shopify USA performance hereunder;

(ii) Except as provided herein with respect to a Stripe Account, Stripe shall not directly re-solicit any Shopify Merchant to offer them a direct relationship with Stripe;

(iii) In the event that a Shopify Payments Merchant contacts Stripe concerning any payment service for use on Shopify during the Term, Stripe will use reasonable efforts to direct such Shopify Payments Merchant to use Shopify Payments;

(iv) None of Shopify USA or any of its affiliates shall, directly or indirectly themselves, or authorize any third party to, solicit Stripe Merchants to terminate a Stripe Account. Shopify USA shall not be in breach of the foregoing in the event that a Stripe Merchant responds to a general advertisement by Shopify USA or one of its affiliates that was published without making use of any information obtained through this Agreement, a Merchant Agreement or on

account of Stripe performance hereunder; and

(v) Neither party hereto nor any of their affiliates shall use information obtained in the course of performing hereunder to intentionally interfere in commercial relationships of the other party, provided that Shopify USA shall have the right to terminate any Merchant Agreement on notice to the other parties thereto.

e. American Express. Notwithstanding anything to the contrary in this Agreement, unless otherwise separately agreed in writing between Stripe and Shopify USA, Stripe will be the service provider with respect to American Express card transaction from Shopify Payments Merchants. Subject to the rights of American Express to require individual Shopify Payments Merchants to enter into a direct agreement with American Express as a condition of processing American Express card ( “Amex Card” ) transactions, Shopify will have the right to establish the fees charged to Shopify Payments Merchants for processing Amex Card transactions.

5. Operation of Shopify Payments