Can a Payment Merchant be sublet what would be repercussions


Hi, a friend of mine who is a resident of USA. He is being asked to rent his company's gateway merchant account to be used by an online Tech Support provider company in India in order for them to charge their fee from their clients in USA through the credit cards. Online Indian businesses providing services to USA can not get their own merchant gateway in USA as they have no Social Security number, so they ask a US company to sublease it's merchant. The US company will not indulge or interact with clients in any way and will only be handling payment in this scenario. So Is it legal to rent/sublease the Merchant gateway to them? Can he be held liable for any misuse of the mechant by Indian company or in case any of their US clients sue them for any reason? If yes, is there a way to indemnify him in USA from any charges civil or criminal in this case, by forming a contract in such a way that specifically says that the merchant provider is exclusively providing payment handling?

Answers (3)


258 votes

Hi. In the narrow conspectus of facts shared by you, it prima facie appears that the arrangement to sublease/rent out the merchant gateway is possible as far as the laws in India are concerned. Since, the present sublease/rent is to take place in US the laws as prevalent in US would govern such sublease/rent. As far as your interest is concerned, there is no restriction to enter into an arrangement by way of an agreement protecting the interest of the merchant gateway lender in all possible ways.


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172 votes

It's OK to have a contract with a situation like this. It's obvious that unless you have the social security number with yourself you can't do the financial transactions in USA if that being an online financial business transaction. There are organizations dedicated to these sort of works only wherein they handle the online financial transactions for other business entities like PayU, Citrus pay etc.
All you need to do is, you need to have such licence which may allow you to sub-lease your merchant gateway to some other as per the USA law, then you need to have a full proof contract with the party to whom you are allowing the merchant gateway and you are done. In the contract itself you will shift the legal burden to the original user and will indemnify yourself for all situations.

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53 votes

Dear Sir,

Thank you for your e-mail.

We can certainly sublet the merchant gateway through an agreement however we need to see the local laws in the USA for for any civil or criminal liability as not agreement can supersede the existing law. We would like to see the terms and condition of getting the merchant gateway to guide you properly.

Thanks
Saurabh

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