8. Commitments and contingencies

Operating leases

The Company leases office space and various office equipment under cancelable and non-cancelable operating leases which expire on various dates through 2018. In general, leases relating to real estate include rent escalation clauses relating to increases in operating costs. Some leases also include renewal options of up to three years.

Operating lease expense is as follows:

	Year ended December 31,
	2014		2013		2012
Operating lease expense	$	1,549,343	$	1,509,465	$	1,515,189

Future minimum rental payments under non-cancelable operating leases are as follows:

Years ending December 31,
2015	$	1,583,575
2016		1,409,433
2017		125,671
2018		5,489
2019		—
Thereafter		—

Total minimum lease payments	$	3,124,168

Capital leases

The following is an analysis of the leased property under capital leases:

	December 31,
	2014			2013
Computer hardware	$	1,989,836		$	1,607,602
Computer software		290,095			258,306

Total capital leases, gross		2,279,931			1,865,908
Less: Accumulated depreciation		(1,039,927	)		(662,082	)

Total capital leases, net	$	1,240,004		$	1,203,826

Future minimum rental payments under capital leases are as follows:

Years ending December 31,
2015	$	499,187
2016		281,438
2017		91,840
2018		3,620
2019		—
Thereafter		—

Total minimum lease payments		876,085
Less: Amounts representing taxes, included in total minimum lease payments*		—

Net minimum lease payments		876,085
Less: Amounts representing interest payments		(59,367	)

Present value of net minimum lease payments	$	816,718

*	Tax amounts related to capital lease payments are inconsequential.

Acquiring bank sponsorship agreements

In order to offer merchant acquiring services for Visa and MasterCard transactions, the Company must be sponsored by a financial institution that is a principal member of the Visa and MasterCard networks.

The Company is liable for all losses incurred by the sponsoring bank with respect to the activities of our merchants sponsored under the agreement. No contingent liability has been recorded as December 31, 2014 as the risk of material loss is considered remote based on historical information. The Company monitors this contingent liability on a quarterly basis and will provide for a reserve if deemed necessary.

The Company has two acquiring bank sponsoring agreements expiring at various dates through 2018. The future minimum payments under those agreements are as follows:

Years ending December 31,
2015	$	406,667
2016		366,667
2017		416,667
2018		300,000
2019		—
Thereafter		—

Total payments	$	1,490,001

Employment agreements

Pursuant to employment agreements with certain employees, the Company had a commitment to pay severance of approximately $0.8 million and $2.0 million as of December 31, 2014 and 2013, respectively, in the event of termination without cause, as defined in the agreements. Additionally, in the event of termination upon a change of control, as defined in the agreements, the Company had a commitment to pay severance of approximately $1.0 million and $2.3 million as of December 31, 2014 and 2013, respectively.

Contingent liabilities

In instances where the Company is acting as the merchant acquirer, the Company bears a risk that a merchant may engage in fraud by submitting for payment certain credit card transactions that may have been manipulated, are fictitious, or are otherwise not bona fide. Similarly, the Company bears the risk that a merchant becomes insolvent, owing money to cardholders. To the extent that such fraud or insolvency occurs in circumstances where the Company is liable to make good any resultant losses, this could affect the Company's operating results and cash flows. The Company has required certain merchants to post cash reserves of approximately $0.8 million with the sponsoring bank against such liabilities and has itself paid the acquirer a security deposit of $0.2 million in connection therewith, which is included in long-term 'Restricted cash" on the consolidated balance sheets. In addition, the Company holds merchant reserves of approximately $2.2 million. This reserve amount is included in "Restricted cash" with an offset in "Due to merchants". Under FASB ASC 460, Guarantees, the Company evaluates its ultimate risk and records an estimate of potential loss for chargeback's related to merchant fraud and processing errors based upon an assessment of actual historical fraud rates and errors in processing compared to recent bank card processing volume levels. No contingent liability has been recorded as of December 31, 2014 and 2013, as the risk of material loss is considered remote. The Company monitors this contingent liability on a quarterly basis and will provide for a reserve if deemed necessary.

Outstanding litigation

From time to time, the Company's operating entities are involved in legal proceedings in the ordinary course of business. While any litigation contains an element of uncertainty, the Company has no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on the financial condition or results of operations of the Company.