HONK MERCHANT OF RECORD SERVICE TERMS, CONDITIONS AND FEES
- Definitions: Capitalized terms used in these MOR Service Terms, Conditions and Fees that are not defined have the meanings given to them in the Services Agreement. In these MOR Service Terms, Conditions and Fees, unless the context otherwise requires, the following capitalized words and phrases shall have the following meanings:
“Account” means the bank account of the Company identified to HONK into which HONK shall make Settlement payments and from which it shall be entitled to deduct Fees.
“Chargebacks” means a charge made to a Cardholder for the sale of a Product that is reversed as a result of a successful dispute by a Cardholder in respect of that Transaction.
“Cleared Funds” means proceeds of Transactions are available for Settlement.
“Credit Losses” means any Loss resulting from (i) Chargebacks; (ii) Penalties; (iii) Refunds: (iv) fraud or fraudulent practices of a Cardholder transacting with the Company; (v) any other claims, demands, liabilities, losses, damages, costs, charges and expenses attributable to the Company in respect of the MOR Services or otherwise related to a Transaction.
“Fees” means any and all fees that are charged by HONK for the MOR Services as set out in Article 9, which Fees are subject to change in accordance with the notice provisions of the Services Agreement;
“HONK” means Honk Mobile Inc.
“MOR” means merchant of record for a Payment Card Transaction.
“Penalties” means all fines, penalties, assessments, reimbursements, administrative fees, charges or other amounts assessed, imposed, levied by a Payment Card Association or a Third Party Service Provider resulting from Cardholder dispute resolution management, Chargebacks, breach of PCI DSS or other security requirements under the Rules, compliance with (or violation of) the Rules, or any similar Payment Card Association Network penalty, fee or compliance cost of any nature including any fines or penalties arising out of the sale by the Company of any Prohibited Products.
“Prohibited Products” has the meaning set out in Section 5.03.
“Products” means the Company’s merchandise, goods, and services, as applicable, sold by the Company to Customers using and supported by the HONK System.
“Refunds” has the meaning set out in Section 3.02.
“Services Agreement” means the Services Agreement between the Company and HONK Mobile Inc.
“Transaction” means the sale of a Product to a Customer that is accompanied with a request for payment through a Payment Card, where that request is initiated by a Customer through the HONK System, whether or not it results in an Authorization.
“HONK System” means the proprietary HONK Software and other hardware system and protocols, sales systems, and APIs through which HONK provides the MOR Services.
“Security Breach” means the occurrence of a Security Event or a Security Incident in respect of the Company.
“Security Event” means any event that results in or may result in any loss or unauthorized destruction, deletion, modification, access, use, disclosure, theft of, compromise of privacy of, or acquisition of Cardholder Data, Transaction data, Customer information, or any other data that constitutes “personal information” under applicable laws.
“Settlement” has the meaning set out in Section 4.03.
“Third-Party Service Providers” means those independent third-party service providers that HONK utilizes to provide the MOR Services including Acquirers, Internet Payment Service Providers, and financial institutions.
“MOR Services” has the meaning set out in Section 2.01.
- MOR Services. Upon integration of the Company’s systems with the HONK System, HONK shall provide the MOR Services. The MOR Services consist of: (i) HONK acting as “Merchant of Record” and being formally recorded (in place of the Company) as the party that is conducting the Transaction with the Customer; and (ii) HONK supporting the processing and settlement of Transactions and any Refunds in respect of Transactions (collectively, the “MOR Services”).
- No Assignment. The Company’s assigned Merchant ID may not be used by any person or entity except the Company approved by HONK for such Merchant ID, and must take all reasonable steps to maintain the confidentiality, and prevent the unauthorized disclosure, of such Merchant ID.
- Scope of Services. Changes in applicable law, generally accepted industry practice, the Rules, applicable financial services regulations, or Products, may compel HONK to modify the basis on which the MOR Services are offered or refrain from offering certain elements of the MOR Services to the Company. The Company acknowledges and consents to any such modifications.
- Rules. The Company shall at all times be deemed bound to the terms and conditions and the Rules to which HONK is bound with respect to relations with Payment Card Associations, PCI DSS, the Electronic Payments Association (NACHA), Automatic Clearing House (ACH), Payments Canada, Canadian, American and other applicable national financial service regulators. The Company acknowledges that the Rules and such terms and conditions may affect the MOR Services HONK provides to Company including, but not limited to, proof of data security, and type of Products that may be sold, volume limits on transactions, and Acquirers that must be used.
- HONK as Merchant of Record. In the role as the MOR, HONK (or its Third-Party Service Providers) shall be responsible for:
- obtaining payment from Customers for Payment Card payments;
- settling and remitting aggregate funds for the Company’s Transactions to the Company (less applicable Fees);
- remitting funds for Refunds to Customers in accordance with Company’s policies and procedures, on behalf of the Company; and
- managing all Chargebacks on behalf of the Company.
- Procedures. The following procedures shall apply to the direction of Transactions in the HONK System:
- once a Transaction is requested through the Services, the Customer, through the HONK Software, shall, as a condition of acquiring the Product, be required to agree to be bound by the Customer Terms and Conditions with HONK, in its capacity as MOR;
- HONK shall, in response to an electronic request for a Transaction, route the requested transaction(s) through the HONK System. When the Customer payment information is verified by HONK or the Third-Party Service Providers, a Transaction shall be deemed to be executed; and
- the HONK System shall electronically transmit or make available a confirmation of the executed Transaction(s) and an electronic invoice/receipt to the Customer and to the Company.
- Records. The electronic records of Transactions or Refunds of Transactions, as maintained by HONK, shall constitute prima facie evidence of the matters recorded therein.
- Conditions. HONK’s obligations to provide the MOR Services are subject to the condition that no event has occurred which would allow HONK to terminate the Services Agreement or these MOR Service Terms, Conditions and Fees.
- Customers. HONK as part of the MOR Services will assist in the maintenance of and facilitate the commercial relationship between the Company and its Customers by providing direct customer service to Customers for payment-related inquiries for Transactions initiated by Customers. The Company shall provide direct customer service to Customers for any order fulfilment, Refund, and Product-related inquiries for a Transaction.
Fraud, Chargebacks and refunds
- Fraud. Subject to Section 3.04, fraud with respect to payment for Transactions that are processed by the HONK System are the responsibility of the Company. The Company must, within two (2) Business Days upon suspecting or discovering fraudulent transactions through the Company report to HONK any unauthorized or fraudulent Transactions of which it is, or may become, aware.
- Refunds. The Company shall have a refund policy (the “Refund Policy”) that it shall comply with and shall be solely responsible for authorizing the return of Products from Customers in exchange for a full or partial refund (a “Refund”), as determined by the Company. The Refund Policy must comply with the requirements of the Rules and applicable law. HONK shall be responsible for the return of payment for Customer’s refunds (a “Refund”) as set out in the Refund Policy. For clarity, as between the Company and HONK, the Company shall be responsible for the funding of all Refunds, including applicable fees. If HONK receives a fee credit for a Refund for the refunded Transaction, Honk will apply this credit against any fees paid by the Company to HONK for the refunded Transaction.
- Chargebacks. As part of the MOR Services, HONK will offer intermediary services to resolve chargeback disputes or claims by Customers. The Company agrees to reasonably assist HONK in preventing and investigating Chargebacks and provide any reasonably requested information.
- Credit Losses. The Company is responsible for all Credit Losses that result from the provision of the MOR Services except for Credit Losses caused by HONK or Third-Party Service Providers (i) breach of their obligations under these MOR Service Terms, Conditions and Fees; (ii) violation of applicable laws or the Rules; or (iii) gross negligence fraud or wilful misconduct.
TAXES AND SETTLEMENT AND RESERVES
- Taxes. When required by applicable law as it applies to HONK acting as MOR, HONK shall charge, collect, and remit sales tax to the appropriate authorities; otherwise, the Company shall have the sole responsibility to collect and remit sales tax in connection with the sale of Products. To the extent that the Company is required under applicable law to collect and remit sales tax on Transactions where HONK is acting as MOR, the sales tax shall be paid by the Company directly to the appropriate authorities.
- Registration. The Company warrants and agrees that it shall, at its own cost, complete and maintain all necessary tax registration requirements for which it is required to charge, collect, pay over, or remit any sales tax. If the Company collects and remits sales tax from the Customer on a Transaction it shall retain, for the period required by applicable tax authorities, proof of remittance to each respective tax authority of any tax sum collected by HONK on Company’s behalf and thereafter passed to Company as the responsible party for payment to a tax authority.
- Settlement. HONK shall credit in Cleared Funds the aggregate amount of all Transactions (based on the inputs of the Company provided through the HONK System) submitted and approved through the HONK System to the relevant Account(s) of the Company (the “Settlement”). Settlement shall be net of any Refunds, Chargebacks, Fees, and other amounts owing by the Company to HONK under these MOR Service Terms, Conditions and Fees or under the Services Agreement.
- Timing of Settlement. HONK will, within 15 Business Days following the end of the calendar month, remit Settlement to the Company, but in no event shall HONK be required to settle with the Company where it has not received Cleared Funds for a Transaction.
- Reserves. HONK, in its sole discretion, may place a hold on a portion of the Company’s Settlement payments (a “Reserve”) in the event that HONK, acting reasonably, believes that the sale of the Company’s Products for Transactions poses a high risk of fraud or Chargebacks. If HONK places a Reserve on the Settlement payments, HONK will provide the Company with written notice specifying the terms of the Reserve. The terms may require:
- that a certain percentage of the Settlement payments be held for a certain period of time;
- that a fixed amount of the Settlement payments is withheld from payout to the Company;
- or such other restrictions that HONK determines in its discretion, acting reasonably.
HONK may change the terms of the Reserve at any time by providing the Company with notice of the new terms. HONK may hold a Reserve as long as it deems necessary, in its sole discretion but acting reasonably, to mitigate any risks related to the Company’s Transactions. The Company agrees that it shall remain liable for all obligations related to Transactions, including after the release of any Reserve.
Representations and Covenants
- PCI DSS Compliant. HONK represents and warrants that its system and data centers meet or exceed the requirements of PCI DSS. HONK agrees to perform the MOR Services, and process Cardholder Data in a manner that adheres to PCI DSS and to any data security measures. HONK acknowledges that it is responsible for the security of Cardholder Data, as defined in the PCI DSS and will promptly notify the Company if HONK’s certification of compliance with the PCI DSS is revoked for any reason.
- Company’s Covenants and Obligations.
The Company agrees that it is solely responsible for, and that HONK has no responsibility nor liability for, the following:
- its advertisement and marketing, including any claims made in its advertising and marketing;
- the risk of loss or damage relating to the Products;
- all fees, including refund fees, and sales taxes payable;
- the Products and the Products functionality including any loss, damage, injury, or death caused by the Products or any Product returns; and
- the accuracy of all Product information.
- Prohibited Products. The Company will ensure it does not offer, sell, or ship any Products not allowed to be sold under applicable law or the Rules (the “Prohibited Products”). HONK reserves the right to modify and add categories of Prohibited Products from time to time. The Company shall reimburse HONK for any costs and expenses it may incur in respect of the offering by the Company of any Prohibited Products. HONK reserves the right to suspend or terminate any or all of the MOR Services provided if it believes that the Company is selling or attempting to sell or has offered or sold any Prohibited Products. For clarity, the Prohibited Product list is not exhaustive, and it is the Company’s responsibility to ensure it does not use the Services for Transactions that are not in compliance with applicable law.
- Title to Products. To the extent applicable, the Company warrants that it has right, title, and licence in the Products to permit HONK the right and ability to facilitate Transactions with HONK as the MOR. In the event the Company is in breach of this warranty, HONK may immediately suspend or terminate the MOR Services and/or the Agreement.
- Provision of Information. The Company shall, for the term of the Agreement, provide HONK with complete and correct information about its business model and any and all other information relevant to the relationship between the Parties. The Company shall also collect, share, and transmit transaction information in a secure manner in compliance with all applicable privacy and data security laws and take any reasonable actions requested by HONK to maintain the security and integrity of the MOR Services.
- Suspension of Service. HONK may suspend all or any part of the MOR Services without any liability to the Company if:
- HONK believes that the Company has materially breached any applicable laws, the Rules, any provision of the Services Agreement, or any additional terms provided by HONK or its Third-Party Service Providers which apply to the Company, and such material breach has not been remedied or cured as set forth in this Agreement;
- in the opinion of HONK, acting reasonably, there is a security threat to HONK or to the Company;
- any cessation of service from HONK’s Third-Party Service Providers, whether temporary or permanent, occurs;
- HONK believes that the Chargebacks are excessive; or
- the Company suffers a Security Breach.
- Collection of Information. HONK shall collect, use and retain Cardholder Data and/or other personal information of Cardholder for the purposes of providing the MOR Services and for reasonable business record retention purposes. HONK shall not disclose Cardholder Data and/or other personal information of Cardholders to third parties except as necessary to provide the MOR Services or as permitted or required by law.
- Fees. The Company shall pay monthly and per transaction fees as more particularly set out in Article 9. In addition, the Company shall pay HONK on demand any fees, fines or penalties, imposed on HONK by a Third-Party Service Provider or any Payment Card Association Network with respect to, or resulting from, the activities or omissions of the Company.
- Payment. Payment for all Fees shall be deducted from any Settlement to the Company.
- Right of Set Off. For any other amounts payable under these MOR Service Terms, Conditions and Fees or the Services Agreement including the amount of any Chargebacks or Refunds that are due in accordance with these MOR Service Terms, Conditions and Fees, HONK is authorized to, and without prior notice, and both before and after demand, set-off in whole or in part, the amount of such Fees, other sums payable, Chargebacks, or Refunds against any sums held or received by HONK and owed to the Company. For the purpose of exercising any set-off right, HONK is entitled to convert and/or exchange any currency and is authorized to effect any such conversion at its prevailing exchange rate. Any exercise by HONK of its rights hereunder shall be without prejudice and in addition to any other rights and remedies available to it under this Agreement.
- By the Company. The Company agrees to fully indemnify, defend and hold harmless HONK, its directors, officers, employees and agents (the “HONK Indemnitees”) from and against any Losses relating to a claim, action, suit or proceeding made, brought or commenced by a third party which arise, result from, or relate to:
- all Product warranties, descriptions, fitness, merchantability and safety;
- all Claims related to Customer’s use of the Products;
- any Claim involving misuse or loss of a Customer’s personal information (including Cardholder Data) by Company including loss due to Security Breach;
- any Claim relating to any taxes chargeable or payable on Transactions;
- any Claim, penalty, fine or loss relating to any improper or illegal transaction;
- any act of negligence or any Claim in respect of Intellectual Property, or, if applicable, title to the Products; or
- any failure by the Company to comply with its obligations under these MOR Service Terms, Conditions and Fees or the Rules or any breach by the Company of any representations or warranties in these MOR Service Terms, Conditions and Fees.
In addition to the foregoing, the Company acknowledges that where HONK is required to provide an indemnity to a Third-Party Service Provider, in the event that the Company’s actions or inactions result in an indemnity Claim against HONK, the Company shall fully indemnify HONK for any such Claim against HONK and there shall be no limitation on the Company’s liability in respect of any such Claim.
- By HONK. Subject to the limitation of liability provisions in the Agreement, HONK agrees to fully indemnify, defend and hold harmless the Company, its directors, officers, employees and agents (the “Company Indemnities”) from and against all Losses relating to a claim brought against the Company alleging that the use of the MOR Services as contemplated under this Agreement infringes on the Intellectual Property Rights of a third party or any claims brought against the Company where such Claim arises as a result of, or in connection with a Security Breach, compromise or theft of Transaction data or failure to comply with applicable law in respect of data protection.
- Termination Rights. These MOR Service Terms, Conditions and Fees will terminate when the Services Agreement terminates. In addition, these MOR Service Terms, Conditions and Fees may be terminated by either party on 30 days’ notice.
- Other Termination Rights. Company acknowledges that HONK, or its third-party financial institutions providing services to HONK, may suspend or terminate a Customer, or the MOR Services due to fraud, suspicious or irregular Transactions, or sale of illegal or potentially illegal Products. HONK will have no liability to the Company in any such event. In addition, HONK has the right to terminate the MOR Services at its sole discretion or to suspend the MOR Services, in either case, immediately upon written notice to the Company if:
- the Company is in breach of any of its representations or warranties or any of its obligations or covenants under these MOR Service Terms, Conditions and Fees;
- such termination or suspension is required under the Rules or under Applicable Law;
- the Chargeback frequency with respect to the Company’s Transactions becomes excessive in the opinion of HONK, acting reasonably, or the Company or its Products are determined by any Third-Party Service Provider to be unacceptably risky;
- HONK is unable to meet the requirements of Third-Party Service Providers for payment processing due to the actions or inactions of the Company; or
- any other event occurs which, under this Agreement, provides HONK with a right to terminate this Agreement, including without limitation, the occurrence of a Security Breach.
2.90% + $0.30
American Express, Discover
2.90% + $0.30
2.90% + $0.30
Chargeback (per occurrence)