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1. ACH Service. PayPal offers services that allow merchants to originate Automated Clearing House (“ACH”) credit and debit entries to a bank account (the “ACH Service”) and Merchant desires to use such services. Such entries are sent by PayPal, acting as a Third-Party Sender, to the Originating Depository Financial Institution (the "ODFI"), which it forwards through the ACH system to the Receiving Depository Financial Institution (the "RDFI"), who debits or credits the bank account of Merchant’s Customer (the "Receiver"). Merchant agrees that its use of the ACH Service is subject to the terms herein and the applicable provisions of the Payment Services Agreement found at https://www.braintreepayments.com/legal/payment-services-agreement (the “Agreement”).Merchant accepts and agrees to comply with all such terms. Capitalized words and phrases used and not otherwise defined in these ACH Service Terms have the same meaning as given to them in the Agreement or in the operating rules and guidelines of the National Automated Clearing House Association (administrator of the ACH network - “Nacha”), as amended from time to time (the "Nacha Rules", available on Nacha’s website). Merchant shall not originate entries on behalf of any third-party. In case Merchant intends to act as a Nested Third-Party Sender, it must enter into a separate agreement with PayPal before it originates any entries.
2. Part of Braintree Payment Services. Merchant agrees that the ACH Service shall be deemed part of (and included in) the definition of Braintree Payment Services under the Agreement. ACH Service transactions shall be deemed part of (and included in) the definition of Transaction under the Agreement.
3. Fees. Merchant will pay PayPal the fees and charges as agreed in writing, as well as other amounts owed, pursuant to these terms and the Agreement. Such other amounts shall include, without limitation, any amounts charged to PayPal and/or Merchant by Nacha in connection with Merchant’s use of the Braintree Payment Services. All fees and other amounts due pursuant to these terms shall be subject to the terms and conditions applicable to fees generally in the Agreement, including, without limitation, those set forth in Section 2 of the Agreement. Any amounts owed to PayPal under these terms may be deducted from any Payout to Merchant or debited from Merchant’s Bank Account.
4. Compliance. Merchant agrees to (i) undertake the responsibilities of an Originator under the Nacha Rules and to comply with and be bound by such rules and other applicable laws and regulations related to use of the ACH network (as may be amended); and (ii) not originate entries that violate these ACH Service Terms, laws of the United States and/or the Nacha Rules.
5. Authorization to Originate Entries. Merchant authorizes PayPal and the ODFI to originate entries on Merchant’s behalf to Receivers’ accounts in accordance with the Nacha Rules.
6. Transaction Limits. Merchant shall operate and use the ACH Service in accordance with the Transaction limits set by PayPal and/or the ODFI in accordance with the Nacha Rules. PayPal can modify the applicable Transaction limits upon reasonable notice.
7. Authorizations. Merchant is solely responsible for obtaining any authorization required by the Nacha Rules, including authorization from each person shown as the Receiver on an entry for the crediting or debiting of the Receiver’s account (e.g. to debit its Customers’ bank accounts for ACH payments), and agrees that it shall obtain such authorization in each instance (“ACH Authorization”). PayPal shall not be liable for any debit or other failure (or any related costs) arising from Merchant’s acts and omissions for failure to obtain any ACH Authorization. Merchant shall maintain data sufficient to reconstruct the transaction authorization and maintain such authorization in accordance with all applicable laws, rules and regulations. Merchant agrees PayPal is permitted to document and store ACH Authorization, including timestamp, Merchant logo and applicable ACH credentials. Merchant shall provide PayPal with evidence of ACH Authorization upon request.
8. Additional Obligations. For debit Web Entries, Merchant must:
a. establish and implement a commercially reasonable (i) fraudulent transaction detection system to screen entries (which must, at a minimum, validate the account to be debited for the first use of such account number, and for any subsequent changes to the account number), and (ii) method of authentication to verify the identity of the Receiver of a debit entry and that the routing number is valid; and
b. conduct, or have conducted on its behalf, annual audits to ensure that the financial information it obtains from Receivers is protected by security practices and procedures that include, at a minimum, adequate levels of: (i) physical security to protect against theft, tampering, or damage; (ii) personnel and access controls to protect against unauthorized access and use; and (iii) network security to ensure secure capture, storage, and distribution (“Merchant’s Annual Audit”).
PayPal shall not be liable for any failure (or any related costs) arising from Merchant’s acts and omissions for failure to comply with this Section 8.
9. ACH Entries.
a. UCC 4A Notice. In relation to credit entries subject to Article 4A of the Uniform Commercial Code, Merchant acknowledges that: (i) the entry may be transmitted through the ACH; (ii) the rights and obligations of the Merchant concerning the entry are governed by and construed in accordance with the laws of the State of Delaware; (iii) any credit given by the RDFI to the Receiver for the entry is provisional until the RDFI has received final settlement (through a Federal Reserve Bank or otherwise has received payment as provided for in Section 4A-403(a) of Article 4A); and (iv) if the RDFI does not receive such payment for the provisional entry, the RDFI is entitled to a refund from the Receiver in the amount of the credit to the Receiver’s account, and the Merchant (acting as Originator) will not be considered to have paid the amount of the credit entry to the Receiver. Merchant agrees that it shall be responsible for all refunds, and PayPal shall have the right to be reimbursed by Merchant for any and all such refunds or other amounts that are charged to PayPal in connection with the ACH Service. PayPal can deduct such amounts from any Payout to Merchant.
b. Payment to ODFI. Merchant agrees to pay the ODFI for any ACH credit entries or returned ACH debit entries if PayPal fails to pay the ODFI for such entries.
c. Cancellation or Amendment. Merchant shall not have the right to cancel or amend an ACH transaction entry after its receipt by PayPal, except as permitted or required by the Nacha Rules.
d. Inconsistency of Name and Number. If an entry describes a financial institution or the Receiver of an entry inconsistently by name and account or other identifying number, the account or other identifying number can be relied upon and the name disregarded.
e. Satisfaction of Customer Debt. In the event that a Transaction is reversed, Merchant acknowledges that, as between Merchant and its Customer, the Customer's debt to Merchant is satisfied when PayPal receives funds from the ODFI in payment of that debt, subject only to a reversal of such payment.
10. Audit. Merchant shall comply with any request made by PayPal, the ODFI, their personnel, auditors and/or representatives for the following: (i) access to Merchant’s facilities, data and records relating to the initiation of entries for the purpose of performing audits or on-site visits to verify Merchant’s compliance with these ACH Service Terms and the Nacha Rules; and/or (ii) copies of Merchant’s Annual Audit reports/results. Merchant shall provide, and shall cause its subcontractors to provide, the access and assistance that may be required by PayPal, the ODFI, their personnel, auditors and/or representatives, including, but not limited to, copies of any data, records, authorizations, audit reports/results, if requested, as well as any other information reasonably requested relating to entries originated by the Merchant.
11. Representations & Warranties. Merchant represents and warrants to PayPal, as an Originator of entries under the Nacha Rules, that: (a) no entry delivered to PayPal or the ODFI, if accepted by the ODFI, will cause PayPal or the ODFI to be in violation of any regulation or sanction administered by the federal or state government or otherwise causes PayPal or the ODFI to be in violation of federal or state law or the Nacha Rules; and (b) it makes the same warranties to PayPal that PayPal, as Third-Party Sender, makes under the Nacha Rules to any ODFI when PayPal transmits an entry.
12. Indemnification. Merchant shall indemnify, defend and hold PayPal, the ODFI, any third-party and their employees, officers, directors and agents, harmless from and against any and all claims, demands, losses, liabilities or expenses (including attorneys’ fees and costs) resulting directly or indirectly from or arising out of (a) Merchant’s breach of the Nacha Rules or of these ACH Service Terms; (b) any claim that PayPal is responsible for any act or omission of Merchant; and (c) compliance by PayPal, the ODFI and the RDFI with any request Merchant makes for a cancellation, stop payment, reversal or recall of any entry. PayPal shall have no responsibility for any delay by any ODFI, ACH Operator or RDFI in processing any entry PayPal transmits to the ODFI or failure to process or credit or debit any such entry.
13. Termination. In addition to the term and termination rights in the Agreement, either party may terminate any or all Braintree Payment Services in accordance with their rights under the Agreement. PayPal or the ODFI may terminate or suspend Merchant’s use of the ACH Service for violation of any Nacha Rules, including, without limitation, acceptable limits for ACH returns. Notwithstanding anything to the contrary in these terms or the Agreement, PayPal is not required to include ACH data in any forwarding or portability services offered under the Agreement.
14. Relationship to the Agreement. These terms are hereby incorporated into and made a part of the Agreement. To the extent that these terms conflict with the terms of the Agreement, these terms shall control with respect to the ACH Service and to the extent of such conflict. Except as amended and/or supplemented by these terms, all terms and provisions of the Agreement shall continue and remain in full force and effect and shall be binding upon the parties.
