2.13 Merchant Agreements for Closed Loop Prepaid Payment Services
This section provides the rules for the disclosure of information between the prepayment operator, "Operator", (issuer and/or acquirer) of a prepaid payment service transaction and the merchant where the agreement relates to a closed loop prepaid product.
2.13.1 Regulated financial institutions
A closed loop prepaid payment service Operator must be a bank in the Kingdom of Saudi Arabia that is permitted to accept deposits, according to the Banking Control Law, issued by Royal Decree, No. M/5 Dated 22.2.1386 H.
2.13.2 Disclosure of charges
The Operator shall disclose in Merchant Service Agreement all charges, if any, associated with the operation of prepaid payment services and acceptance of prepaid payment service transactions and an explanation of the method of computation of charges as follows:
a. Card account operational fees. Fees payable by the merchant, which may include card issuing fees, annual fees, load fees, etc.;
b. Terminal fees. Any prepaid specific fees for the rental of Point of Sale terminal equipment or any connection charges and frequency of assessment;
c. Merchant Service Commission rates. Any specific prepaid payment service commission rate that is used to compute a commission against the total volume of sales, differentiating between any flat or ad valorem fee, including the frequency of assessment (for example daily, weekly, monthly, etc.). If different rates apply to different types of transactions, the types of transactions and the rates applicable shall also be disclosed;
d. Other charges and penalty charges. The rate of charges, itemised and identified by type, of any charges other than terminal fees and merchant service commission rates charged to the merchant for accepting prepaid payment service transactions and frequency of assessment.
2.13.3 Changes in charges
The Operator shall inform the merchant in writing of any changes in charges at least 60 working days before the changes take effect.
2.13.4 Cancellation of agreement
The merchant shall have the right to cancel a Merchant Service Agreement with a notice period not to exceed 90 calendar days.
2.13.5 Settlement period
The Operator shall disclose within the Merchant Service Agreement the elapsed time between the deposit of transactions, these being either captured on paper or electronically, and the crediting of the value, less any applicable charges according to section 2.13.2, into the merchant’s account. The Operator must pay or credit their contracted Merchants after the transaction reconciliation process is completed according to the terms and conditions stipulated in the Merchant Service Agreement. Payment must cover the transaction totals reduced by the credits (reversals, adjustments and refunds) and any applicable Merchant discounts.
2.13.6 Merchant’s liability for unauthorised use of prepaid payment services
a. The Operator shall disclose the prescribed procedures as follows when accepting prepaid payment service transactions, either in the Merchant Service Agreement or an associated set of operating procedures. The disclosure shall cover:
1- The process that the merchant must follow to verify the identity of the primary cardholder )e.g. ask the cardholder to enter his PIN) ;
2- A statement informing the merchant that it is required to ask for authorisation for all prepaid transactions, (i.e. the floor limit for a prepaid transaction shall be 0 Saudi Riyal, where no offline transactions are permitted)
3- The merchant’s obligations for retaining evidence of the transaction, such as receipts and/or electronic records;
4- Reasonable time periods within which merchants must provide documented evidence, such as signed receipts, to assist the Operator with resolving primary cardholder disputes rose through the issuer.
b. The Operator must disclose any merchant liability arising from an obligation to ensure that the prepaid payment service payment system provided is not misused for acts of fraud, dishonesty or misconduct.
2.13.7 Statementing
The prepaid payment service Operator shall mail or deliver by other means a periodic statement to the merchant relating to prepaid transactions credited to the merchant account. The statement shall disclose the following items:
a. Transactions. A summary of all prepaid payment service transactions, categorised by the charges disclosed in 2.13;
b. Charges. A disclosure of the amount itemised and identified by type of any charges debited to the merchant account during the statement cycle;
c. Address for notice of statement errors. The address to be used for notice of statement errors.