Answer:
As a card-issuing institution, you will be obliged to adhere to MasterCard contractual requirements if you issue cards with the MasterCard logo. That includes the MasterCard zero liability program for businesses (which provides less protection for the business than does their program for consumers).
Aside from the requirements of the MasterCard or Visa programs, you are free to create any contractual provisions that you can convince the customer to accept. For example, it's normal for such contracts to require the business to honor transactions completed by their authorized cardholders, regardless of whether the transactions themselves are authorized. That addresses situations, for example, when an employee uses a business card for a personal transaction. It's also common to include an agreement that the business is liable for all transactions by an authorized cardholder until the business notifies the bank that a cardholder is no longer authorized.
Agreements for business debit card issuance are not things that should be drawn up by your compliance officer or operations staff. They should be drawn up by your bank's business unit, certainly, but only with guidance from bank counsel.
First published on BankersOnline.com 5/21/07
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