What does Merchant Agreement mean?
It is a basically legally binding agreement between the merchant and the banking institution he works with. Within this agreement are states rights and obligations of the merchant to which he agrees by signing it. There are mostly matters revolving around credit card involving transactions, and the terms and conditions, rules and regulations differ from one issuer to the other.
Among extra requirements which can be stipulated in such an agreement are the reserve accounts for example. These are additional accounts to the basic merchant account, where the merchant himself may be required to make a deposit as a sort of guarantee or “cover-up” for the card issuers themselves. A merchant agreement works 99% for the safety of the issuer and not the merchant itself, and that is why it is of utmost importance that the merchant carefully reads through the whole fine print pertaining to such an agreement. Otherwise, there is the danger he will sign a document allowing the bank at any time to withdraw funds from his merchant account in case a problem arises, without him knowing that this is a stipulation in the contract.