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retalie77 · 01-02-2003, 05:32 PM

Electronic Commerce
(i) Additions to Rules of determine Electronic Commerce Merchant Location
(ii) Changes of Cross-Border Acquiring Rules

In brief:

Rules are announced that determine where a Transaction takes place in the virtual environment. With the proliferation of third-party entities helping online sellers accept payment cards on the Internet, Visa has adapted its rules, which will better reflect the new business models while reinforcing Member obligations and responsibilities.

Cross-border acquiring restrictions are revisited in the light of these new requirements.

The Member acknowledges that the information contained in this Letter is confidential to the intended recipient (the Member) only and the Member agrees that it will not use or disclose, or allow to be used or disclosed, any information supplied by Visa which the Member has received without the prior written consent of Visa. The Member agrees that it will use all its best endeavours to prevent the unauthorised use or disclosure of such information to any third parties.

(i) Merchant Location

BACKGROUND

In the physical world, the location of a Merchant Outlet determines the country where the Merchant must deposit its Transactions, which Acquirers may contract with it, and which domestic, regional, or interregional rules apply to the Transactions it generates. Until now, a Merchant Outlet was defined as ¡§the physical premises of the Merchant at which a Transaction is completed.¡¨

Since this description does not address the online environment, Visa has developed a set of criteria to help Members and Merchants determine a remote Merchant Outlet¡¦s location.

The new criteria expand the current rules for Mail/Phone Order (MO/TO) and Electronic Commerce Merchants, stipulating that a Transaction takes place at the Merchant Outlet, regardless of the Cardholder location at the time of the Transaction.

Approved Operating Principles

1.0 Merchant Outlet

The definition of Merchant Outlet has been expanded by adding the italicised text:

Merchant Outlet: The physical premises of the Merchant at which a Transaction is completed. Effective 01 January 2003, an Electronic Commerce or Mail/Phone Order Merchant Outlet is located in the country where all of the following conditions occur:

?Ï There is a permanent establishment through which the economic activity (i.e., relevant Visa Transactions) is completed.

?Ï The Merchant has a local address for correspondence and judicial process.

Note:
A Post Office Box or mail forwarding service does not meet this requirement.

?Ï The Merchant holds a valid business license for the Merchant Outlet.

?Ï The Merchant Outlet pays taxes related to the sales activity.

In case of dispute, Visa reserves the right to determine a Merchant Outlet¡¦s location based on an evaluation of the Merchant¡¦s business model and any other available information. Visa reserves the right to request from the Member necessary documents for determination a Merchant Outlet¡¦s location. Visa¡¦s decision is final. As in the physical world, a single Merchant can have multiple Merchant Outlets that may be located in multiple jurisdictions.

2.0 Website Requirement

To minimise Cardholder confusion, the existing requirement that a Merchant declare its country of domicile on its Websites is revised effective 01 January 2003, to require that the country of domicile of the Merchant Outlet location be clearly disclosed to the Cardholder immediately prior to completion of payment instructions.

MEMBER IMPACT

Acquirers must incorporate these criteria into their procedures and policies for evaluating prospective Merchants. In addition, Acquirers must review existing Merchants to ensure compliance with these requirements.

All Merchants are required to display the Merchant Outlet country of domicile to the Cardholder immediately prior to completing payment instructions. In accordance with current rules governing Merchant Agreement requirements, an Acquirer must include this provision in its Electronic Commerce Merchant Agreements.

(ii) Changes of Cross-Border Acquiring Rules

Effective 01 January 2003 the Principles governing Member jurisdiction are reviewed to assist Members in determining their jurisdictional rights to sign Electronic Commerce Merchants. The rules for signing a traditional ¡§brick-and-mortar¡¨ Merchant, as specified in the Visa International Operating Regulations, Volume 1 ¡V General Rules, Section 4.2.A.2 Cross-Boarder Merchant Contracting, also apply to Electronic Commerce Merchants, and reflect a fundamental principle of the worldwide system: Visa Program development within any country is best achieved through the participation of indigenous institutions within that country.

Electronic Commerce Merchants may only be signed by a Member within the country jurisdiction to acquire E-commerce Transactions. Member should not sign with any Electronic Commerce Merchants outside a Member jurisdiction. Visa may impose a special schedule of fines for any willful violation of this requirement.

Jurisdiction and Multiple Merchant Locations

The Visa International By-Laws and Regional Boards Delegations specifies the jurisdiction of a Member. It states that ¡§the jurisdiction of a Member is limited to the country (including territories and possessions thereof) where it has its principal place of business¡K¡¨ For example, if a Member¡¦s principal place of business is in the United States, the Member may sign Merchant Outlets that are located in the United States and its territories, such as Guam, Puerto Rico, and the US Virgin Islands.

However, a territory may be part of another Visa Region. Therefore, Members must be aware of, and comply with, any additional requirements, including the payment of any fees imposed by the applicable Regional Operating Regulations. Some Merchants, however, have locations in more than one country, and may only be signed by a Member with the jurisdictional right to acquire Transactions in that country.

Merchant Qualification Standards

Before signing any Merchant, an Acquirer or IPSP, as specified in the Visa International Member Letter IML # 13/02, acting in accordance with the new IPSP requirements must determine that a prospective Merchant is financially responsible and will abide by the Visa International and Regional Operating Regulations, as well as applicable local law. This includes ensuring that the Merchant is bona fide, legitimately doing business in the country it declares as its business location.

An Acquirer or IPSP should exercise particular diligence when investigating a remote or electronic commerce entity to confirm the country location of an Electronic Commerce Merchant. Visa reserves the right to request from the Member necessary documents for additional investigation Electronic Commerce Merchant especially in the event that the Merchant has a significant volume transaction or a high level of chargeback. As described in part (i) of this letter, the following information must be associated with the same country:

?Ï Information available on the Merchant¡¦s Website (i.e., where does the Merchant claim it is located and where does the Merchant declare its choice of law?)

?Ï Information provided by the Merchant on its application forms as to its physical address (must be a physical address, not a P.O. Box or mail- forwarding service)

?Ï Physical premises (a ¡§permanent establishment¡¨) where staff that support sales activity for the goods or services being sold is located.

?Ï Business license (what governing authority issued the license for the Merchant to legally conduct business)

?Ï Where the taxes associated with the sale of goods and merchandise are paid.

Additionally, Acquirers and IPSPs must ensure that the Merchant or Sponsored Merchant is financially sound, e.g., by reviewing credit reports, obtaining a detailed business description, etc. Such investigations could also be extended to the Merchant¡¦s agents, such as supplier and fulfillment partners. The majority of these factors apply to MO/TO Merchants.

Examples

Examples are provided in the Attachment, ¡§Determining Merchant Location for Remote Merchants.¡¨

As illustrated in the examples, the location of a Merchant's headquarters has no bearing on evaluating an Acquirer's right to acquire Transactions from a particular Merchant Outlet; Acquiring rights are related to the location of the individual Merchant Outlet. Note that, for Electronic Commerce Merchants, the country where the Website is registered is merely a possible indication of a Merchant Outlet's country. A Member must consider all relevant factors in determining the location of a particular Merchant Outlet. Non-Member Agents and IPSPs are bound by these jurisdictional requirements and may only solicit Merchant Outlets within the jurisdiction of their acquiring Members.

01-02-2003, 05:32 PM
retalie77 Registered User Join Date: Jan 2003 Posts: 3	New Visa rules (begin) Electronic Commerce (i) Additions to Rules of determine Electronic Commerce Merchant Location (ii) Changes of Cross-Border Acquiring Rules In brief: Rules are announced that determine where a Transaction takes place in the virtual environment. With the proliferation of third-party entities helping online sellers accept payment cards on the Internet, Visa has adapted its rules, which will better reflect the new business models while reinforcing Member obligations and responsibilities. Cross-border acquiring restrictions are revisited in the light of these new requirements. The Member acknowledges that the information contained in this Letter is confidential to the intended recipient (the Member) only and the Member agrees that it will not use or disclose, or allow to be used or disclosed, any information supplied by Visa which the Member has received without the prior written consent of Visa. The Member agrees that it will use all its best endeavours to prevent the unauthorised use or disclosure of such information to any third parties. (i) Merchant Location BACKGROUND In the physical world, the location of a Merchant Outlet determines the country where the Merchant must deposit its Transactions, which Acquirers may contract with it, and which domestic, regional, or interregional rules apply to the Transactions it generates. Until now, a Merchant Outlet was defined as ¡§the physical premises of the Merchant at which a Transaction is completed.¡¨ Since this description does not address the online environment, Visa has developed a set of criteria to help Members and Merchants determine a remote Merchant Outlet¡¦s location. The new criteria expand the current rules for Mail/Phone Order (MO/TO) and Electronic Commerce Merchants, stipulating that a Transaction takes place at the Merchant Outlet, regardless of the Cardholder location at the time of the Transaction. Approved Operating Principles 1.0 Merchant Outlet The definition of Merchant Outlet has been expanded by adding the italicised text: Merchant Outlet: The physical premises of the Merchant at which a Transaction is completed. Effective 01 January 2003, an Electronic Commerce or Mail/Phone Order Merchant Outlet is located in the country where all of the following conditions occur: ?Ï There is a permanent establishment through which the economic activity (i.e., relevant Visa Transactions) is completed. ?Ï The Merchant has a local address for correspondence and judicial process. Note: A Post Office Box or mail forwarding service does not meet this requirement. ?Ï The Merchant holds a valid business license for the Merchant Outlet. ?Ï The Merchant Outlet pays taxes related to the sales activity. In case of dispute, Visa reserves the right to determine a Merchant Outlet¡¦s location based on an evaluation of the Merchant¡¦s business model and any other available information. Visa reserves the right to request from the Member necessary documents for determination a Merchant Outlet¡¦s location. Visa¡¦s decision is final. As in the physical world, a single Merchant can have multiple Merchant Outlets that may be located in multiple jurisdictions. 2.0 Website Requirement To minimise Cardholder confusion, the existing requirement that a Merchant declare its country of domicile on its Websites is revised effective 01 January 2003, to require that the country of domicile of the Merchant Outlet location be clearly disclosed to the Cardholder immediately prior to completion of payment instructions. MEMBER IMPACT Acquirers must incorporate these criteria into their procedures and policies for evaluating prospective Merchants. In addition, Acquirers must review existing Merchants to ensure compliance with these requirements. All Merchants are required to display the Merchant Outlet country of domicile to the Cardholder immediately prior to completing payment instructions. In accordance with current rules governing Merchant Agreement requirements, an Acquirer must include this provision in its Electronic Commerce Merchant Agreements. (ii) Changes of Cross-Border Acquiring Rules Effective 01 January 2003 the Principles governing Member jurisdiction are reviewed to assist Members in determining their jurisdictional rights to sign Electronic Commerce Merchants. The rules for signing a traditional ¡§brick-and-mortar¡¨ Merchant, as specified in the Visa International Operating Regulations, Volume 1 ¡V General Rules, Section 4.2.A.2 Cross-Boarder Merchant Contracting, also apply to Electronic Commerce Merchants, and reflect a fundamental principle of the worldwide system: Visa Program development within any country is best achieved through the participation of indigenous institutions within that country. Electronic Commerce Merchants may only be signed by a Member within the country jurisdiction to acquire E-commerce Transactions. Member should not sign with any Electronic Commerce Merchants outside a Member jurisdiction. Visa may impose a special schedule of fines for any willful violation of this requirement. Jurisdiction and Multiple Merchant Locations The Visa International By-Laws and Regional Boards Delegations specifies the jurisdiction of a Member. It states that ¡§the jurisdiction of a Member is limited to the country (including territories and possessions thereof) where it has its principal place of business¡K¡¨ For example, if a Member¡¦s principal place of business is in the United States, the Member may sign Merchant Outlets that are located in the United States and its territories, such as Guam, Puerto Rico, and the US Virgin Islands. However, a territory may be part of another Visa Region. Therefore, Members must be aware of, and comply with, any additional requirements, including the payment of any fees imposed by the applicable Regional Operating Regulations. Some Merchants, however, have locations in more than one country, and may only be signed by a Member with the jurisdictional right to acquire Transactions in that country. Merchant Qualification Standards Before signing any Merchant, an Acquirer or IPSP, as specified in the Visa International Member Letter IML # 13/02, acting in accordance with the new IPSP requirements must determine that a prospective Merchant is financially responsible and will abide by the Visa International and Regional Operating Regulations, as well as applicable local law. This includes ensuring that the Merchant is bona fide, legitimately doing business in the country it declares as its business location. An Acquirer or IPSP should exercise particular diligence when investigating a remote or electronic commerce entity to confirm the country location of an Electronic Commerce Merchant. Visa reserves the right to request from the Member necessary documents for additional investigation Electronic Commerce Merchant especially in the event that the Merchant has a significant volume transaction or a high level of chargeback. As described in part (i) of this letter, the following information must be associated with the same country: ?Ï Information available on the Merchant¡¦s Website (i.e., where does the Merchant claim it is located and where does the Merchant declare its choice of law?) ?Ï Information provided by the Merchant on its application forms as to its physical address (must be a physical address, not a P.O. Box or mail- forwarding service) ?Ï Physical premises (a ¡§permanent establishment¡¨) where staff that support sales activity for the goods or services being sold is located. ?Ï Business license (what governing authority issued the license for the Merchant to legally conduct business) ?Ï Where the taxes associated with the sale of goods and merchandise are paid. Additionally, Acquirers and IPSPs must ensure that the Merchant or Sponsored Merchant is financially sound, e.g., by reviewing credit reports, obtaining a detailed business description, etc. Such investigations could also be extended to the Merchant¡¦s agents, such as supplier and fulfillment partners. The majority of these factors apply to MO/TO Merchants. Examples Examples are provided in the Attachment, ¡§Determining Merchant Location for Remote Merchants.¡¨ As illustrated in the examples, the location of a Merchant's headquarters has no bearing on evaluating an Acquirer's right to acquire Transactions from a particular Merchant Outlet; Acquiring rights are related to the location of the individual Merchant Outlet. Note that, for Electronic Commerce Merchants, the country where the Website is registered is merely a possible indication of a Merchant Outlet's country. A Member must consider all relevant factors in determining the location of a particular Merchant Outlet. Non-Member Agents and IPSPs are bound by these jurisdictional requirements and may only solicit Merchant Outlets within the jurisdiction of their acquiring Members.