Product Terms: Payment Transaction Services

The following Product Terms apply to payment transaction services provided by Bank Partner to Client as set forth in the Covered Banking Services section of the Banking Services Agreement (collectively, the “Payment Transaction Services”). These Product Terms are governed by, and incorporated by reference into, the Banking Services Agreement. Capitalized terms not otherwise defined herein are ascribed the same meaning as set forth in the Banking Services Agreement.

1.1 ACH Services. If applicable, Bank Partner will provide Client and End Users with Automated Clearing House services (“ACH Services”), which will allow Client and End Users to originate requests to transmit debit and credit entries into their respective Accounts via the Client Platform. Client agrees to comply with the NACHA Rules in its use of the ACH Services. Further, Client will cooperate with Bank Partner (and Unit, on Bank Partner’s behalf) to complete any registrations under the NACHA Rules, if required. Without limiting the foregoing, Client will:

(a) identify the originator of each transaction as directed by Bank Partner or Unit; and

(b) indemnify Bank Partner and Unit for any action or omission in performing Client’s ACH-related obligations, subject to the terms and conditions applicable to indemnification under the BSA, including the Banking Services Terms and these Product Terms.

1.2 ACH Thresholds. Client will not exceed ninety five percent (95%) of any NACHA thresholds for returns, including returns on the basis that the transaction was unauthorized, returns for administrative reasons, or all returns, regardless of the cause, in any thirty (30) day period. If Client reaches or exceeds such threshold limitation, then (in addition to any other remedies under the BSA) Bank Partner (or Unit, on Bank Partner’s behalf) may:

(a) impose Caps on Client’s use of the ACH Services;

(b) suspend Client’s use of all or a portion of the ACH Services until Client has demonstrated to Bank Partner’s satisfaction that Client has implemented appropriate changes to restore  the return rate level to below the required maximum; and/or

(c) adjust the amount required to be held in the Reserve Account.

If Client reaches the thresholds defined by NACHA, Bank Partner or Unit (on Bank Partner’s behalf) may in its sole discretion reject or stop processing Client’s ACH entries. Bank Partner and Unit shall have no liability to Client or any End User arising from a decision to cease or suspend processing of ACH entries due to Client’s level of returns exceeding NACHA thresholds. If NACHA imposes a fine on Bank Partner or Unit due to Client’s NACHA violation, Bank Partner or Unit, as applicable, will pass the fine and any associated penalties to Client for payment or deduct the funds from the Reserve Account.

1.3 Remote Check Deposit. If applicable, Bank Partner will make available to Client remote check deposit services, through which Client and End Users may transmit check images for deposit into their respective Accounts. Client’s use of the remote check deposit services is subject to, and Client agrees to comply with, the terms and conditions for remote check deposit services, as amended from time to time.

1.4 Wires. If applicable, Bank Partner will make available to Client incoming and outgoing wire services, through which Client and End Users may transmit wire transfers from and receive wire transfers into their respective Accounts.

1.5 Reliance on Instruction. Bank Partner will rely solely on the numbers contained in a request for ACH or card processing in the event of any inconsistency between the numbers and the words contained in such request.

1.6 Returned Transactions. Client acknowledges that any transaction request may be returned by the receiving institution for insufficient funds or other reasons. In the event a transaction is returned or charged back due to lack of authorization, any attempt by Client to resubmit such request may be denied or conditioned upon submission of proof of authorization prior to attempting to reprocess such transaction. All returns to Client or End Users of a disputed transaction will remain final unless the receiving institution otherwise accepts proof of authorization and disputed transaction. Client acknowledges and agrees that Client may be charged a fee per return of Client’s transactions.

1.7 Stop Payment. All transaction requests are final and are not subject to stop payment or recall orders. If received promptly after the transaction is initiated, Bank Partner or Unit (on Bank Partner’s behalf) shall use commercially reasonable efforts to seek to stop payment, but neither Bank Partner nor Unit shall be liable to Client or any End User for any failure or inability to stop a payment.

1.8 Security Procedures. Bank Partner or Unit (both in its capacity as a service provider to Bank Partner and as the provider of the Unit Services to Client) may define certain transaction-related security procedures which may be updated from time to time, and all such security procedures provided by Bank Partner or Unit to Client will be followed by Client at all times. The security procedures are intended to verify authenticity of a transaction order or account and not to detect any errors in such orders, and may include using any code, password, personal identification number, user identification technology, token, certificate, or other element, means, or method of authentication or identification. Client acknowledges and agrees, and will have the End Users expressly agree, that authenticity of the payment and transfer orders issued to Bank Partner will be verified by the security procedures, that such security procedures are commercially reasonable methods of providing security against unauthorized payment orders, and that End User is bound by any payment order, whether or not authorized, issued in its name and accepted by Bank Partner in compliance with the security procedures.

1.9 ACH Origination & Compliance under NACHA Rules.

(a) Acknowledgement and Authorization. If the Bank Partner determines and provides notice to Client that Client is an “Originator” or “Third-Party Sender” for certain ACH activities under the NACHA Rules, then Client acknowledges and agrees to such designation and to comply with all obligations applicable to such designation, including any indemnities, covenants, data retention obligations, representations, or warranties that are required to be made, given, or performed by an Originator or a Third-Party Sender, as applicable, under the NACHA Rules. If Client is deemed to be a Third-Party Sender, Client also agrees that it will enter into ACH origination agreements between Client and its End Users that conform to the NACHA Rules prior to originating any ACH entries on behalf of such End Users. To the extent Client is acting as an Originator or Third-Party Sender, Client authorizes Bank Partner to originate debit and credit entries on Client’s behalf.

(b) UCC Article 4A Disclosures. When Client is acting as an Originator or Third-Party Sender pursuant to credit entries subject to the Uniform Commercial Code Article 4A, Bank Partner agrees to comply with and makes the following disclosures to Client:

1. Provisional Payment.  Any credit given by the Receiving Depository Financial Institution (“RDFI”) to the Receiver of an ACH credit entry is provisional until the RDFI receives final settlement for such entry through a Federal Reserve Bank Partner as provided for in Section 4A-403(a) of Article 4A of the Uniform Commercial Code. If the RDFI does not receive such final settlement, Client acknowledges and agrees that the RDFI is entitled to a refund of the amount credited to the Receiver in connection with such entry, and the Originator of the ACH credit entry will not be considered to have paid the amount of the credit Entry to the Receiver.
2. Notice of Receipt. Under the NACHA Rules, which are applicable to ACH transactions involving Client’s accounts, Client acknowledges and agrees that Bank Partner is not required to give next day notice to Client of receipt of an ACH item and will not do so. Bank Partner will notify Client of all receipts of payments in periodic statements in the ordinary course.
3. Choice of Law. Bank Partner may accept on Client’s behalf payments to Client’s account which have been transmitted through one or more Automated Clearing Houses and which are not subject to the Electronic Fund Transfer Act. All rights and obligations with respect to such payments shall be construed in accordance with and governed by the laws and courts identified in the Banking Services Agreement.