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Insights and Expertise

include licensing terms, including usage rights,
4. Termination and exit strategies: restrictions and intellectual property ownership.
Consider including provisions that address up-
• Termination for cause and convenience: The MPA dates, support and any associated fees.
should clearly define the circumstances under
which either party can terminate the agreement. • Service level agreements (SLAs): SLAs are essen-
Termination for cause may include breaches such tial for ensuring that your services meet the mer-
as non-compliance with PCI DSS, excessive charge- chant’s expectations. The MPA should define the
backs or fraud. Termination for convenience allows performance metrics, such as uptime, transaction
either party to end the agreement with notice, typi- processing speeds and support response times, as
cally after a specified period. well as the remedies available to the merchant if
you fail to meet these standards.
• Notice period and transition support: The agree-
ment should specify the notice period required Best Practices for Negotiating MPAs
for termination and any transition support you
will provide to the merchant, such as assistance in Following are four best practices for MPA negotiation.
switching to a new provider or settling outstand- 1. Understand the merchant’s business model: Tailor-
ing transactions. This helps maintain goodwill and ing the MPA to the merchant’s specific business model
ensures a smooth transition. is crucial for a successful partnership. Consider factors
• Survival of key provisions: Certain provisions, such as the merchant’s transaction volume, average
such as those related to confidentiality, indemni- transaction value, industry risks and growth potential
fication and post-termination obligations, should when negotiating terms.
survive the termination of the agreement. These 2. Balance risk and reward: Strike a balance between
clauses are crucial for protecting your interests protecting yourself from risks and offering competi-
even after the contractual relationship ends. tive terms that attract merchants. This may involve ne-
gotiating lower fees for high-volume merchants while
5. Liability and indemnification: ensuring adequate protection against chargebacks and
• Limitation of liability: To protect against unfore- fraud.
seen liabilities, the MPA should include a limitation 3. Foster transparency and communication: Trans-
of liability clause that caps your exposure to dam- parency in pricing, fees and responsibilities is key to
ages. This cap is often tied to the fees earned under building trust with merchants. Clearly communicate
the agreement or a specific dollar amount. the terms of the MPA and be open to discussing any
• Indemnification provisions: The MPA should in- concerns the merchant may have.
clude indemnification provisions that require the 4. Engage legal counsel early: Given the complexity of
merchant to indemnify you for losses arising from MPAs and the potential risks involved, engage experi-
the merchant’s actions, such as breaches of the enced legal counsel early in the negotiation process. Le-
agreement, fraud or non-compliance with regula- gal experts with experience in the electronic payments
tory requirements. Mutual indemnification clauses industry can help identify potential pitfalls, negotiate
may also be considered to protect both parties. favorable terms, and ensure that the agreement com-
• Insurance requirements: You may require mer- plies with all relevant laws and regulations.
chants to maintain specific insurance coverage,
such as general liability, cyber liability and errors MPAs are foundational to the relationship between PSPs
and omissions insurance. The MPA should outline and merchants. By carefully negotiating these agreements,
these requirements and include provisions for pro- you can protect your interests, mitigate risks, and build
viding proof of insurance. strong, profitable partnerships with merchants.

6. Technology and integration: An alumnus of the University of San Diego, School of Law, Leo
Arzumanyan has a proven track record of drafting, reviewing, revising
• Payment gateway integration: The MPA should and negotiating an extensive array of commercial contracts, includ-
address the integration of the merchant’s payment ing vendor, nondisclosure, employment, software-as-a-service, consult-
systems with your gateway. This includes specify- ing and marketing agreements. Leveraging his prior in-house counsel
ing who will be responsible for the integration, any background, Arzumanyan has also carved out a unique niche within
associated costs and the timeframe for completing
the integration. the electronic payments industry as his transactional expertise now
encompasses merchant processing, merchant banking and sponsorship,
• API and software licensing: If you provide soft- referral, independent sales office, and other related agency agreements.
ware or API access to the merchant, the MPA must Contact him at larzumanyan@glrlegal.com.

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