Pathward Bank Payment Service Terms

Direct BluePenguin Customers – Last updated October 31, 2025

These Bank Payment Service Terms (“Terms”) are between BluePenguin Payments, Inc. (“BluePenguin”), Pathward, National Association (“Bank”) and the company contracting with BluePenguin for payment services (“Client”). Each may be referred to as a “Party” or collectively as “Parties.” BluePenguin’s and Bank’s agreement to these Terms shall be evidenced by Bank’s provision of the Bank Payment Services to Client. For the avoidance of doubt, these Terms are incorporated by reference into any service contract between Client and BluePenguin. See Section 2 for details. At the end of these Terms there is a glossary where the capitalized terms used in these Terms appear.

1. Roles of BluePenguin and Bank. Client understands and agrees that BluePenguin is a financial technology company that provides outsourced solutions for its merchant customers using a proprietary payment platform and accompanying technologies that allows Client to disburse payments to Client’s customers and/or vendor payees (“Client Customers”) via ACH Transactions and Card Payment Transactions. All funds transfers are performed by the Bank based on BluePenguin’s instructions. Any payment amounts received from Client or Client Customers in connection with the Bank Payment Services sponsored by Bank shall be maintained in a custodial settlement account held by Bank pending transfer to Client or Client Customers. BluePenguin’s actions in connection with funds transfers are done on behalf of and as a service provider to Bank and Client. At no point during the payment process or otherwise does BluePenguin receive, hold or transmit Client or Client Customer funds, and BluePenguin does not serve as a money transmitter, nor is BluePenguin a bank or money services business. As a technology partner, BluePenguin implements functions on behalf the Bank and provides ancillary services to Client. Bank will not have any obligation or liability of any nature in connection with any services of any kind provided by BluePenguin or its agents or subcontractors.

2. Relation to Client Agreement. The Bank Payment Services are being offered as a supplemental service to the other services provided by BluePenguin under the client agreement to which these Terms are attached (“Client Agreement”). These Terms supplement and are intended to be part of the Client Agreement between BluePenguin and Client. The applicable terms of the Client Agreement are hereby ratified, affirmed and incorporated herein and shall continue to apply in all respects with respect to the Bank Payment Services, except as amended hereby. To the extent there is a conflict between these Terms and the Client Agreement, these Terms shall govern with respect to the Bank Payment Services.

3. ACH Services. BluePenguin (along with the Bank) will provide Client with the ACH services described in these Term (collectively, the “ACH Services”) to enable Client to disburse payments to its Client Customers via an ACH Transaction. In connection with the ACH Services, Bank is the Originating Depository Financial Institution (ODFI) for electronic funds transfer debit and credit entries requested by Client through the ACH network. Client acknowledges and agrees to the following with respect to any ACH Services requested by Client:

Client authorizes BluePenguin to instruct Bank to originate ACH entries on behalf of Client to the account of a Receiver (as defined by Nacha Rules) subject to the instructions provided by Client to BluePenguin.
Client agrees to abide by Nacha Rules.
Client will not request BluePenguin to instruct Bank to originate ACH entries that violate applicable law.
Client agrees that Client is only authorized to originate CCD (Corporate Credit or Debit Entry) or CTX (Commercial Trade Exchange) entries and all ACH entries shall be for commercial purposes only.
Client shall ensure that the rate of all ACH returns does not exceed the percentage thresholds permitted by Nacha Rules. In the event ACH returns exceed such percentage thresholds, Client shall provide a detailed explanation regarding such percentage. BluePenguin or Bank, in their sole and good faith discretion, may suspend the processing of ACH Transactions if (a) Client fails to provide such explanation, or (b) if after investigation of Client’s explanation BluePenguin or Bank reasonably determines that Client will be unable to reduce the excessive rate of ACH returns within a commercially reasonable period of time.
Prior to submitting an ACH entry to BluePenguin for processing, Client shall secure all authorizations and approvals from its Client Customer and deliver any notifications pertaining to that entry which are required by the Nacha Rules and/or applicable laws and regulations. Client shall retain such consents and authorizations for two (2) years from the termination or revocation of the authorization and provide copies of such authorizations to BluePenguin and Bank upon reasonable request.
Client acknowledges that BluePenguin has specific processing deadlines imposed by the Bank. Instructions received by the deadline will be transmitted that day to the Federal Reserve Bank for settlement on the effective settlement date. Instructions received after the deadline will be processed the next Banking Day (as that term is defined in the Nacha Rules).
If Client does not comply (or cure non-compliance) with the Nacha Rules, BluePenguin or Bank may suspend the origination of ACH entries and/or terminate such ACH services.

4. Locations; Permitted Use. Client acknowledges and agrees that Transactions may only be made to Client Customers within geographies permitted by Bank and the relevant System, which may change from time to time. Client represents and warrants that each Transaction submitted for processing in connection with these Terms is solely for Client’s receipt of bona fide goods, services or other value from Client Customers and each Transaction represents a bona fide payment obligation owed to or by Client and not in connection with a payment obligation owed to or by any other third party.

5. Accuracy and Completeness. As between the Parties, Client shall be solely responsible for the accuracy and completeness of all Transactions, records, data and other information provided to BluePenguin or Bank in connection with the Bank Payment Services.

6. Client Customer Support. As between Bank, BluePenguin and Client, Client will be responsible for promptly addressing and resolving Client Customer inquiries or disputes related to a Transaction.

7. Client’s Payment Obligations.

Client understands and agrees that all disbursement Transactions shall be prefunded by Client to the Settlement Account held by Bank. Client authorizes BluePenguin and Bank to initiate ACH debit transfers from a Client-owned U.S. bank account designated in writing by Client (“Client Account”) to prefund the Settlement Account. For each disbursement Transaction submitted by Client, BluePenguin and Bank shall be authorized to withdraw Client’s funds from the Settlement Account in the amount of such Transaction plus all fees due and owing to BluePenguin in association therewith. If amounts deposited by Client into the Settlement Account are insufficient to fund a disbursement Transaction, Client acknowledges that the applicable System and Bank have the right to decline to facilitate any such Transaction.
Client acknowledges and agrees that Transactions operate on a “good funds” model in which settlement is guaranteed. As between the Parties, Client shall be solely responsible and liable for the funding of all Transactions, chargebacks, returns, and all errors in connection with the Transactions resulting from incomplete and/or inaccurate data submitted by Client or any Client Customers.
Client shall be responsible for all costs, liabilities, fines, or other payment obligations imposed on BluePenguin or the Bank by the Systems or other third parties resulting from Client’s errors, omissions or inaccurate information provided in connection with the Transactions processed on Client’s behalf.
Client shall immediately reimburse BluePenguin and Bank for any shortfalls that occur in the Settlement Account related to any Transactions, including shortfalls attributable to disbursements, chargebacks, returns, costs, liabilities, fines, or other payment obligations owed by Client under these Terms. Client hereby authorizes BluePenguin and Bank (if applicable) to initiate ACH debit transfers from its Client Account (defined below) or reserve (if any) in the amount of any such shortfalls. BluePenguin and Bank reserve the right to delay the availability of funds for deposit without prior written notice to Client if BluePenguin or Bank, in their sole discretion, deems itself at financial or other risk for any and all Transactions performed under this Agreement.
Client hereby acknowledges and agrees that BluePenguin and Bank shall have a right of setoff against: (1) any amounts BluePenguin or Bank would otherwise be obligated to deposit into Client’s Client Account, and (2) any other amounts BluePenguin or Bank may owe to Client under these Terms or the Client Agreement.

8. Term. These Terms shall commence on the date these Terms are executed by Client and will thereafter be co-terminus with the term of the Client Agreement between BluePenguin and Client, unless terminated earlier pursuant to Section 12 below.

9. General Suspension; Termination.

General Termination. A Party may terminate these Terms by giving 30 days’ advance written notice if another Party materially breaches these Terms and fails to remedy the breach within 30 days of receiving notice of such breach.
Risk Termination. BluePenguin or Bank may immediately suspend or terminate these Terms, in either Party’s discretion, upon notice to the other Parties: (i) if Client engages in fraud, misrepresentation, or intentional misconduct related to its performance under these Terms; (ii) if Client experiences a material adverse change in its financial condition (including the failure to pay any of its debts); (iii) if a System, a governmental authority or the Bank issues an instruction for Client or BluePenguin to suspend its performance under or terminate these Terms; (iv) as provided in Section 3; or (v) upon termination of Bank’s servicing agreement with BluePenguin.
Upon the termination of performance of these Terms, the Parties shall reasonably cooperate to establish a mutually acceptable plan for discontinuing the Bank Payment Services.

10. Confidential Information.

Confidentiality. No Party will disclose non-public information about another Party’s business (including these Terms, technical specifications, customer lists, or information relating to a Party’s operational, strategic, or financial matters) (together, Confidential Information). Confidential Information does not include information that: (1) is or subsequently becomes publicly available (through no fault of the recipient); (2) the recipient lawfully possesses before its disclosure; (3) is independently developed without reliance on the discloser’s Confidential Information; or (4) is received from a third party that is not obligated to keep it confidential. Each Party will implement and maintain reasonable safeguards to protect the other Party’s Confidential Information.
Disclosure. The recipient may disclose another Party’s Confidential Information: (1) to its directors, officers, personnel, and representatives (including those of its subsidiaries, affiliates, subcontractors or vendors) that need to know it in connection with the recipient’s performance under these Terms, and are bound by confidentiality obligations materially similar to those required under these Terms; and (2) in response to a subpoena, court order, request from a regulator, or as required under applicable laws or System Rules.

11. Data Security.

Client is responsible for any unauthorized access to any Transaction data or Personal Data of Client Customers maintained on Client’s systems or the systems of third parties retained by or on behalf of Client.
Each Party shall comply with all applicable PCI DSS requirements, System Rules and privacy and data protection laws and requirements that apply to its performance under these Terms.
To the extent Client collects, accesses, stores or processes Personal Data of Client Customers solely in connection with the Bank Payment Services, Client shall, maintain a comprehensive written information security program that complies with all applicable privacy and data protections laws and requirements and includes technical, physical, and administrative/organizational safeguards designed to (a) ensure the security and confidentiality of Personal Data, (b) protect against any anticipated threats or hazards to the security and integrity of Personal Data, (c) protect against any actual or suspected unauthorized access, loss, or acquisition of any Personal Data, (d) ensure the proper disposal of Personal Data, and (e) regularly test or otherwise monitor the effectiveness of the safeguards.
Security Incident. (i) If a Party becomes aware that there has been unauthorized access to Transaction data or Personal Data of a Client Customer (a Security Incident), it will promptly notify the other Parties. Each Party will take reasonable steps to contain, control, stop, and remediate any Security Incident. (ii) The Party suffering a Security Incident will provide reasonable details regarding the Security Incident to, and cooperate with, the other Parties, any Systems, and the forensics firms that are involved in the investigation and remediation of the Security Incident. Each Party will take all actions that the Systems require in connection with the investigation and remediation of a Security Incident. (iii) Each Party will reimburse the others for all fines, fees, penalties, assessments, or other obligations of any kind imposed by a System or a regulator on the other Parties due to a Security Incident caused by it or its third party service providers (together, System Security Fees).
Nothing contained in these Terms shall apply to, limit or prohibit the use in any manner of, any Transaction data or Personal Data collected or obtained by Client, BluePenguin or by Bank or its respective affiliates, to the extent such information or data was obtained by such Party or its affiliates independent of the Bank Payment Services or these Terms, even if such information or data is duplicative of Transaction data or Personal Data collected or obtained in connection with the Bank Payment Services or these Terms.

12. Identity Verification. Client shall be responsible for conducting identity verification and “Know Your Customer” due diligence on each Client Customer prior to using the Bank Payment Services in connection with the processing of any payments to or from such Client Customer, as appropriate and necessary. Client shall not engage in any activities related to the Bank Payment Services with an entity or an individual who has not been verified.

13. Compliance. At all times, and without limiting the generality of any other provision in these Terms, Client shall comply with applicable laws relating Client’s business activities.

14. Suspicious Activities Reporting. Client shall notify BluePenguin of any suspicious or fraudulent activities in connection with Transactions or Bank Payment Services contemplated under these Terms as soon as practicable and in no event later than five (5) days after Client becomes aware of such activities.

15. Fraud Detection. Client agrees to cooperate in good faith and provide reasonable assistance in the applicable System’s or Bank’s fraud detection and prevention efforts. Client agrees that the applicable System, Bank and BluePenguin may use Client’s confidential information or Personal Data of Client Customers for identifying, monitoring and remediating fraud.

16. Financial Information; Audit. Client will promptly provide any financial or other information reasonably requested by BluePenguin, on Bank’s behalf, to perform credit risk, security, qualification, and other reviews related to the provision of the Bank Payment Services, Transactions submitted, compliance with these Terms, or the financial condition of Client. BluePenguin or its designee, on Bank’s behalf, may perform a reasonable audit of Client’s records to confirm Client’s compliance with these Terms with 30 days’ advance written notice to Client, during Client’s normal business hours.

17. Indemnification. Client will indemnify BluePenguin and the Bank (including their respective affiliates, directors, officers, managers, and employees) for losses, damages, costs, or expenses (together, Losses) due to third party claims that result from Client’s or its third party service providers’ gross negligence, willful misconduct, or breach of these Terms.

18. Exclusion of Damages. BluePenguin, Bank, and Client will not be liable to each other for lost profits, revenues, or business opportunities, nor any exemplary, punitive, special, indirect, incidental, or consequential damages (whether direct or indirect) under these Terms; regardless of whether these damages were foreseeable or a Party was advised they were possible.

19. Limitation of Liability. BluePenguin’s and Client’s aggregate liability to the other for losses arising from any cause (regardless of the form of action or legal theory) in connection with these Terms will be as set forth in the Client Agreement. Bank’s liability to Client is limited to Client’s actual damages caused by Bank’s gross negligence or willful misconduct in the performance of Bank’s obligations set forth in Section 1 above, in an amount not to exceed the fees paid to Bank by BluePenguin related to the Transactions made on Client’s behalf during the three (3) months preceding the date on which the claim arose.

20. Notices. Written notices (other than normal operations) required under these Terms will be sent by email, certified mail, or courier (all with tracking and delivery confirmation). Notices will be effective upon receipt. Notices to Bank will be sent to: Pathward, N.A., 5501 S. Broadband Lane, Sioux Falls, SD 57108 Attention: General Counsel.

21. Notifications. Client shall promptly notify BluePenguin in writing of the following:

Any communication from any governmental authority which suggests or may suggest that the activities of Client, BluePenguin, Bank or the applicable System in connection with these Terms may be in violation of any law;
Any change in law that Client reasonably believes may result in the activities of Client, BluePenguin, Bank or the applicable System to be in violation of any law;
Any change in Client’s business activities conducted in connection with the Transactions.

22. Notice of Material Changes; Third Parties. Client will provide BluePenguin with reasonable advance notice of any material change in the nature of Client’s business (including any change in control or merger, any liquidation, any transfer or sale of substantially all of its assets, or any change to Client’s operations that would materially affect the products or services sold, the procedures for payments acceptance, or the fulfillment of obligations to a Client Customer). If applicable, Client will provide BluePenguin with a written disclosure identifying the third parties, systems, and services Client uses to receive, transmit, process, or otherwise manage information or its information technology systems (e.g., without limitation, encryption or firewall providers) related to the transaction information or payment data processed in connection with these Terms.

23. Waivers. A party’s waiver of a breach of these Terms will not be considered a waiver of a subsequent breach.

24. Governing Law, Waiver of Jury Trial. These Terms will be governed by Delaware law (without regard to its choice of law provisions). The courts of Delaware will be the proper venue for legal proceedings brought in connection with these Terms. Each Party waives its right to a jury trial for claims arising in connection with these Terms.

25. Miscellaneous. These Terms include any schedules, addenda and amendments (capitalized terms used in the schedules, addenda, or amendments without definition will have the meanings given to them in these Terms). These Terms constitute the entire agreement between the Parties with respect to the Bank Payment Services and replaces any prior agreements or understandings (written or oral) with respect to its subject matter. These Terms and any schedules, addenda or amendments may be executed electronically and in counterparts, each of which constitutes one agreement when taken together. Electronic and other copies of the executed Terms are valid. Client may not assign these Terms without Bank’s and BluePenguin’s written consent (not to be unreasonably withheld). These Terms will be enforceable against a Party’s permitted successors or assigns. Client must obtain prior written approval for any publicity or marketing related to the Bank and its role in connection with these Terms. There are no third party beneficiaries to these Terms. Each Party is responsible for the performance of any third parties it uses in connection with the Bank Payment Services, and their compliance with the terms of these Terms.

26. Glossary. Except as otherwise specifically indicated, the following terms shall have the following meanings in these Terms (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ACH Transaction” means an electronic funds transfer that is authorized by a Client Customer and represents an order or request for the transfer of money to the account of, or an order or request for the withdrawal of money from the account of such Client Customer under the Nacha rules, and any reversal, chargeback or refund of that transaction.

“Bank Payment Services” means the receipt, handling and custodial control of Client or Client Customer funds and the transmittal of such funds to Client or Client Customers via a Transaction.

“Card” is a physical or digital card, code, device, or other means allowing access to a Client Customer’s demand deposit, prepaid, or similar account via a System.

“Card Payment Transaction” means a stored-value prepaid Card issued by Bank on behalf of Client and used to pay a specific sum of money to a Client Customer by enabling the Client Customer to access the value through a Card acquiring transaction processed by its acquiring processor.

“Nacha” means the administrator of the ACH network.

“Nacha Rules” means the then-current rules, regulations and procedural guidelines published by Nacha.

“Settlement Account” means the commercial custodial account established by Bank for the benefit of BluePenguin and its clients (including Client) and used to settle Transactions processed by BluePenguin and Bank under these Terms.

“Personal Data” means any information relating to a Client Customer that is collected, stored, transmitted or processed in connection with the Transactions processed pursuant to these Terms.

“System” means Visa, U.S.A., Inc. (“Visa”), MasterCard International Incorporated (“Mastercard”), Nacha, and/or any other electronic payment network for transmitting items and settlement thereof that BluePenguin indicates are compatible with the Bank Payment Services.

“System Rules” means the by-laws, regulations and operating rules of any System which is utilized by BluePenguin and Bank for the purposes of fulfilling each such Party’s obligations hereunder.

“Transaction” means any ACH Transaction or Card Payment Transaction.