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Credit Card Processors (Merchant Processing Agreements) - Financial Regulation

Last reviewed or updated: December 29, 2022

A Credit Card Processor is a person that processes credit card or electronic commerce transactions on behalf of a business entity for a fee. Credit card processors include merchant services providers, financial institutions, independent sales organizations, and any subsidiary or affiliate of such an entity. Refer to Md. Code Ann., Com. Law §12-1401(b).

A Credit Card Processor may not assess or charge a fee, fine, or penalty that exceeds $500 if a business entity cancels a merchant processing agreement before the expiration of the initial term of the merchant processing agreement. Refer to Md. Code Ann., Com. Law §12-1403(a). If a business entity terminates the merchant processing agreement after the expiration of the initial term of the agreement, the credit card processor may not assess a fee, fine, or penalty, unless a credit card processor and a business entity have entered into a separate renewal merchant processing agreement. Refer to Md. Code Ann., Com. Law §12-1403(b).  

A merchant processing agreement shall disclose clearly and conspicuously:

  1. The amount of any early termination fee, fine, penalty, or liquidated damages that may be assessed by the credit card processor for termination of a merchant processing agreement before the expiration of the initial term;
  2. The expiration date of the merchant processing agreement;
  3. The renewal date of the merchant processing agreement; and
  4. The customer service contact information of the credit card processor, including telephone number, mailing address, and e-mail address.

Refer to Md. Code Ann., Com. Law §12-1403(c). The credit card processor shall provide a copy of the merchant processing agreement to the business entity. Refer to Md. Code Ann., Com. Law §12-1403(e).

Maryland law grants the Commissioner authority to investigate complaints involving merchant processing agreements. Refer to Md. Code Ann., Com. Law §12-1404.

NOTE: The above provisions do not apply to a merchant processing agreement if either: (1) the agreement may be terminated without assessment of fees, fines, penalties, or liquidated damages, or (2) if, at the time of entry into the agreement, the business entity employs 50 or more employees or reasonably estimates that it will generate more than $ 2,000,000 in credit card or electronic commerce transactions each year. Refer to Md. Code Ann., Com. Law §12-1402.

Laws, Rules, and Regulations

Credit Card Processors are expected to be knowledgeable about and in compliance with their obligations under Maryland law when processing credit card or electronic commerce transactions on behalf of business entities, and any other applicable State or Federal statutes, rules, and regulations.

Maryland laws, rules, and regulations can be found by accessing the Annotated Code of Maryland and Rules and Code of Maryland Regulations (COMAR). Certain relevant Maryland laws, rules, and/or regulations include, but are not necessarily limited to: