HONK Merchant Of Record Service Terms, Conditions And Fees
Section 1: MOR Services
1.1 MOR Services. The MOR Services consist of: (i) HONK acting as “Merchant of Record” and being formally recorded (in place of the Operator) as the party that is conducting the Transaction with the End-User; and (ii) HONK supporting the processing and settlement of Transactions and any Refunds in respect of Transactions (collectively, the “MOR Services”).
1.2 Access. The Operator shall receive access to the HONK Software that is administered solely by HONK and must at all times during the Term meet and maintain HONK’s qualifications and criteria for approval as a user of the MOR Services. Subject to providing reasonable commercial notice to the Operator if possible, HONK reserves the right, in its sole discretion, to suspend or revoke access in the event of a material change to the Operator’s status, business model, the Products offered, or any other change which would have a material adverse effect on that the Operator’s ability to meet or maintain the qualifications and criteria, and terms of use, reasonably set by HONK or its Third-Party Service Providers.
1.3 No Assignment. The Operator’s access may not be used by any person or entity except the Operator approved by HONK and must take all reasonable steps to maintain the confidentiality and prevent the unauthorized access to the HONK Software.
1.4 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 Operator. The Operator acknowledges and consents to any such modifications.
1.5 Rules. The Operator 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 Operator acknowledges that the Rules and such terms and conditions may affect the MOR Services HONK provides to Operator 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.
1.6 HONK as Merchant of Record. In the role as the MOR, HONK (or its Third-Party Service Providers) shall be responsible for:
a) obtaining payment from End-Users for Payment Card payments;
b) settling and remitting aggregate funds for the Operator’s Transactions to the Operator (less applicable Fees);
c) remitting funds for Refunds to End-Users in accordance with Operator’s policies and procedures, on behalf of the Operator; and
d) managing all Chargebacks on behalf of the Operator.
1.7 Procedures. The following procedures shall apply to the direction of Transactions in the HONK Software:
a) once a Transaction is requested through the Services, the End-User, through the HONK Software, shall, as a condition of acquiring the Product, be required to agree to be bound by the End-User Terms and Conditions with HONK, in its capacity as MOR;
b) HONK shall, in response to an electronic request for a Transaction, route the requested transaction(s) through the HONK Software. When the End-User payment information is verified by HONK or the Third-Party Service Providers, a Transaction shall be deemed to be executed; and
c) the HONK Software shall electronically transmit or make available a confirmation of the executed Transaction(s) and an electronic invoice/receipt to the End-User and to the Operator.
1.8 Records. The electronic records of Transactions or Refunds of Transactions, as maintained by HONK, shall constitute prima facie evidence of the matters recorded therein.
1.9 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 Agreement or these MOR Service Terms.
1.10 End-Users. HONK as part of the MOR Services will assist in the maintenance of and facilitate the commercial relationship between the Operator and its End-Users by providing direct customer service to End-Users for payment-related inquiries for Transactions initiated by End-Users. The Operator shall provide direct customer service to End-Users for any order fulfilment, Refund, and Product-related inquiries for a Transaction.
Section 2: Fraud, Chargebacks and refunds
2.1 Fraud. Subject to Section 3.4, fraud with respect to payment for Transactions that are processed by the HONK Software are the responsibility of the Operator. The Operator must, within two (2) Business Days upon suspecting or discovering fraudulent transactions through the Operator report to HONK any unauthorized or fraudulent Transactions of which it is, or may become, aware.
2.2 Refunds. The Operator 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 End-Users in exchange for a full or partial refund (a “Refund”), as determined by the Operator. The Refund Policy must comply with the requirements of the Rules and applicable law. HONK shall be responsible for the return of payment for End-User’s refunds (a “Refund”) as set out in the Refund Policy. For clarity, as between the Operator and HONK, the Operator 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 Operator to HONK for the refunded Transaction.
2.3 Chargebacks. As part of the MOR Services, HONK will offer intermediary services to resolve chargeback disputes or claims by End-Users. The Operator agrees to reasonably assist HONK in preventing and investigating Chargebacks and provide any reasonably requested information.
2.4 Credit Losses. The Operator 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; (ii) violation of applicable laws or the Rules; or (iii) gross negligence fraud or wilful misconduct.
Section 3: Settlement and Reserves
3.1 Registration. The Operator 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 Operator collects and remits sales tax from the End-User 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 Operator’s behalf and thereafter passed to Operator as the responsible party for payment to a tax authority.
3.2 Settlement. HONK shall credit in Cleared Funds the aggregate amount of all Transactions (based on the inputs of the Operator provided through the HONK Software) submitted and approved through the HONK Software to the relevant Account(s) of the Operator (the “Settlement”). Settlement shall be net of any Refunds, Chargebacks, Fees, and other amounts owing by the Operator to HONK under these MOR Service Terms or under the Agreement.
3.3 Timing of Settlement. HONK will, within 15 Business Days following the end of the calendar month, remit Settlement to the Operator, but in no event shall HONK be required to settle with the Operator where it has not received Cleared Funds for a Transaction.
3.4 Reserves. HONK, in its sole discretion, may place a hold on a portion of the Operator’s Settlement payments (a “Reserve”) in the event that HONK, acting reasonably, believes that the sale of the Operator’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 Operator with written notice specifying the terms of the Reserve. The terms may require:
a) that a certain percentage of the Settlement payments be held for a certain period of time;
b) that a fixed amount of the Settlement payments is withheld from payout to the Operator;
c) 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 Operator 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 Operator’s Transactions. The Operator agrees that it shall remain liable for all obligations related to Transactions, including after the release of any Reserve.
Section 4: Representations and Covenants
4.1 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 Operator if HONK’s certification of compliance with the PCI DSS is revoked for any reason.
4.2 Operator’s Covenants and Obligations. The Operator agrees that it is solely responsible for, and that HONK has no responsibility nor liability for, the following:
a) its advertisement and marketing, including any claims made in its advertising and marketing;
b) the risk of loss or damage relating to the Products;
c) all fees, including refund fees, and sales taxes payable;
d) the Products and the Products functionality including any loss, damage, injury, or death caused by the Products or any Product returns; and
e) the accuracy of all Product information.
4.3 Prohibited Products. The Operator 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 Operator shall reimburse HONK for any costs and expenses it may incur in respect of the offering by the Operator 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 Operator 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 Operator’s responsibility to ensure it does not use the Services for Transactions that are not in compliance with applicable law.
4.4 Title to Products. To the extent applicable, the Operator 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 Operator is in breach of this warranty, HONK may immediately suspend or terminate the MOR Services and/or the Agreement.
4.5 Provision of Information. The Operator 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 Operator 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.
4.6 Suspension of Service. HONK may suspend all or any part of the MOR Services without any liability to the Operator if:
a) HONK believes that the Operator has materially breached any applicable laws, the Rules, any provision of the Agreement, or any additional terms provided by HONK or its Third-Party Service Providers which apply to the Operator, and such material breach has not been remedied or cured as set forth in this Agreement;
b) in the opinion of HONK, acting reasonably, there is a security threat to HONK or to the Operator;
c) any cessation of service from HONK’s Third-Party Service Providers, whether temporary or permanent, occurs;
d) HONK believes that the Chargebacks are excessive; or
e) the Operator suffers a Security Breach.
4.7 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.
Section 5: Fees
5.1 Fees. The Operator shall pay monthly and per transaction fees as more particularly set out in Article 9. In addition, the Operator 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 Operator.
5.2 Payment. Payment for all Fees shall be deducted from any Settlement to the Operator.
5.3 Right of Set Off. For any other amounts payable under these MOR Service Terms or the Agreement including the amount of any Chargebacks or Refunds that are due in accordance with these MOR Service Terms, 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 Operator. 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.
Section 6: Indemnity
6.1 By the Operator. The Operator 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:
a) all Product warranties, descriptions, fitness, merchantability and safety;
b) all Claims related to End-User’s use of the Products;
c) any Claim involving misuse or loss of a End-User’s personal information (including Cardholder Data) by Operator including loss due to Security Breach;
d) any Claim relating to any taxes chargeable or payable on Transactions;
e) any Claim, penalty, fine or loss relating to any improper or illegal transaction;
f) any act of negligence or any Claim in respect of Intellectual Property, or, if applicable, title to the Products; or
g) any failure by the Operator to comply with its obligations under these MOR Service Terms or the Rules or any breach by the Operator of any representations or warranties in these MOR Service Terms.
In addition to the foregoing, the Operator acknowledges that where HONK is required to provide an indemnity to a Third-Party Service Provider, in the event that the Operator’s actions or inactions result in an indemnity Claim against HONK, the Operator shall fully indemnify HONK for any such Claim against HONK and there shall be no limitation on the Operator’s liability in respect of any such Claim.
6.2 By HONK. Subject to the limitation of liability provisions in the Agreement, HONK agrees to fully indemnify, defend and hold harmless the Operator, its directors, officers, employees and agents (the “Operator Indemnities”) from and against all Losses relating to a claim brought against the Operator 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 Operator 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.
Section 7: Termination
7.1 Termination Rights. These MOR Service Terms will terminate when the Agreement terminates. In addition, these MOR Service Terms may be terminated by either party on 30 days’ notice.
7.2 Other Termination Rights. Operator acknowledges that HONK, or its third-party financial institutions providing services to HONK, may suspend or terminate a End-User, 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 Operator 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 Operator if:
a) the Operator is in breach of any of its representations or warranties or any of its obligations or covenants under these MOR Service Terms;
b) such termination or suspension is required under the Rules or under Applicable Law;
c) the Chargeback frequency with respect to the Operator’s Transactions becomes excessive in the opinion of HONK, acting reasonably, or the Operator or its Products are determined by any Third-Party Service Provider to be unacceptably risky;
d) HONK is unable to meet the requirements of Third-Party Service Providers for payment processing due to the actions or inactions of the Operator; or
e) 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.
Section 8: Definitions
8.1 Definitions: Capitalized terms used in these MOR Service Terms that are not defined have the meanings given to them in the Services Agreement, Order Form or Terms of Service (USA) or Terms of Service (Canada), as applicable. In these MOR Service Terms, unless the context otherwise requires, the following capitalized words and phrases shall have the following meanings:
a) Account” means the bank account of the Operator identified to HONK into which HONK shall make Settlement payments and from which it shall be entitled to deduct Fees.
b) “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.
c) “Cleared Funds” means proceeds of Transactions are available for Settlement.
d) “Credit Losses” means any Loss resulting from (i) Chargebacks; (ii) Penalties; (iii) Refunds: (iv) fraud or fraudulent practices of a Cardholder transacting with the Operator; (v) any other claims, demands, liabilities, losses, damages, costs, charges and expenses attributable to the Operator in respect of the MOR Services or otherwise related to a Transaction.
e) “Fees” means any and all fees that are charged by HONK for the MOR Services as set out in the Order Form, which Fees are subject to change in accordance with the notice provisions of the Agreement;
f) “MOR” means merchant of record for a Payment Card Transaction.
g) “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 Operator of any Prohibited Products.
h) “Prohibited Products” has the meaning set out in Section 5.3.
i) “Products” means the Operator’s merchandise, goods, and services, as applicable, sold by the Operator to End-Users using and supported by the HONK Software.
j) “Refunds” has the meaning set out in Section 3.2.
k) “Transaction” means the sale of a Product to a End-User that is accompanied with a request for payment through a Payment Card, where that request is initiated by a End-User through the HONK Software, whether or not it results in an Authorization.
l) “Security Breach” means the occurrence of a Security Event or a Security Incident in respect of the Operator.
m) “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, End-User information, or any other data that constitutes “personal information” under applicable laws.
n) “Settlement” has the meaning set out in Section 4.2.
o) “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.
p) “MOR Services” has the meaning set out in Section 2.1.
Version dated 2025-01-16