What is Indemnification?
Indemnification in PaymentWorks refers to the protection provided to payers against financial loss due to fraudulent payments made through the platform. This safeguard ensures that payments are backed by a system of validation and verification checks that minimize risk.
Key Points About Indemnification
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Bank Verification Status and Indemnification
- Bank Verification Status is a key contributing factor when assessing risk at the time of payment, but it is not the sole determinant of indemnification.
- If a bank account could not be fully verified at the time of registration, it may receive an indeterminate status, such as "low risk" or "elevated risk." These risk levels help PaymentWorks evaluate the overall transaction risk when determining whether a payment can be approved and indemnified.
- For more details on how to see the Bank Verification status, check out this Knowledge Base article:
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Indemnification at the Transaction Level
- Payers with the appropriate permissions can review the indemnification status for each payment transaction within the PaymentWorks application.
- This transparency allows payers to assess whether a payment is protected under the indemnification terms.
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Risk-Based Decision-Making
- PaymentWorks evaluates multiple factors, including the payment amount and account validation status, to decide if a transaction falls within the acceptable risk tolerance for indemnification.
- For example, a low-value payment might still be indemnified despite an indeterminate bank verification status if the overall risk is deemed minimal.
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Limitations and Exclusions
- Indemnification applies only to U.S. domestic ACH payments processed through the PaymentWorks platform.
- Payments made outside the platform, via non-ACH methods, or without adherence to established validation processes are not covered under indemnification.
- Payers are encouraged to follow best practices for payment approval workflows to maximize their protection.