Company: DLX
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000027996-25-000051
Chunk: 28

Company: DELUXE CORP
Filing Date: 2025-02-21
Form: 10-K
Item: Item 1A
Chunk 28
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, we could be liable for fraudulent electronic payment transactions or credits initiated by merchants or other parties. Although we have implemented safeguards to reduce these risks, we cannot entirely prevent fraudulent transactions. To date, we have not incurred material losses from payment-related fraud. However, such transactions can negatively impact our results of operations and may lead to penalties from payment card networks for insufficient fraud protection.

Furthermore, we may be liable if our merchants or other parties fail to fulfill their obligations to deliver goods or services to cardholders. For instance, we could face contingent liability for transactions initially processed by us that are later disputed by the cardholder and charged back to the merchants or other parties. These disputes can arise from various issues, including fraud, misuse, unintentional use, settlement delays or failures, insufficient funds, returns, or failure to perform a service. If we are unable to recover the disputed amounts from the merchant or other party due to insolvency or other reasons, we will bear the loss for the refund paid to the cardholder. Despite having an active credit risk management program, a default by one or more of our merchants or other parties could negatively impact our business, results of operations, and financial condition.

We are subject to payment card network rules, and any changes to these rules could adversely impact our business and financial results.

As a provider of transaction processing services, we are registered with Visa, Mastercard, and other networks either as a  member or as a service provider for member institutions. This registration subjects us to card association and network rules. Any changes to these rules or their interpretations could have a significant impact on our business and financial results. For example, modifications to chargeback rules may affect our ability to dispute chargebacks and the extent of losses we might incur from them. Additionally, changes in network rules could lead to increased costs, impose new restrictions, or otherwise affect the development and deployment of our retail point-of-sale solutions, potentially limiting their adoption.

If any changes to or interpretations of the network rules conflict with our current operations, we may be required to make costly or challenging adjustments to our business practices. Such adjustments could negatively impact our results of operations.

Revenue generated from providing services to merchants that accept Visa and Mastercard is dependent on our ongoing registrations with these card networks, sponsorship by financial institutions, and, in some instances, maintaining membership in specific card networks.

To offer Visa and Mastercard transaction processing services, we must either be a direct member or be registered as a merchant processor or service provider for these networks. This registration relies on sponsorship from members